Britain's top share index fell 1.8 percent early on Thursday, pulled back by weakness in heavyweight oils, miners and banks, after the Federal Reserve cut its outlook for the U.S. economy.
At 0805 GMT, the FTSE 100 index was 80.52 points lower at 4,387.89 having closed 13.84 points lower on Wednesday.
"The Fed comments have cast uncertainty over things, after we started to have a lot of talk about green shots the Fed has really eliminated a lot of this", said Daniel Harris, trader at CFD specialists Blue Index.
Wall Street fell on Wednesday in a late stage sell-off, after the Fed lowered its 2009 forecast for gross domestic product, undercutting recent optimism that the economy might be turning the corner.
Banks were among the worst performing UK blue chips, mirroring falls by their U.S. peers, with HSBC, Royal Bank of Scotland, Barclays, Standard Chartered, and Lloyds Banking Group shedding 2.0 to 3.5 percent.
"U.S. financials fell sharply with lots of uncertainty over whether they and the UK banks will need to raise fresh capital which has seen sentiment for the FTSE turn," Harris added.
However U.S. Treasury Secretary Timothy Geithner said the Obama administration was making headway in calming financial markets and would have a program to cleanse toxic assets from banks' balance sheets up and running by July.
Commodity issues also took a beating as worries about the U.S. economic recovery created demand concerns.
Oil majors fell back as crude weakened, with Royal Dutch Shell, BP, BG Group, Cairn Energy, and Tullow Oil all down between 0.6 and 12.8 percent.
Miners retreated with lower metal prices led by Kazakhmys and Eurasian Natural Resources down 5.1 and 4.9 percent respectively, while BHP Billiton, Xstrata, and Rio Tinto fell 1.3 to 3.4 percent.
A top Australian shareholder in Rio Tinto has called for changes to the miner's planned $19.5 billion tie-up with Chinalco. "They can revise and should revise the whole cocktail of it," said Paul Xiradis, chief executive of Ausbil Dexia, Rio's ninth-largest shareholder, according to Thomson Reuters data.
Separately, the Sydney Morning Herald newspaper said on Thursday that Chinalco will restructure the deal to allay Australian government concerns.
BRITISH LAND, C&W RESULTS BLIGHT
Property group British Land was a big FTSE 100 faller, down 5 percent after the property company saw its full-year net asset value tumble 64 percent to 398 pence a share, below the average forecast of 423.6 pence.
British Land posted 3.2 billion pounds ($5 billion) of markdowns in property values, triggering new worries for banks yet to defuse risks on their huge exposure to the battered UK real estate market.
Other real estate stocks suffered as well, with Land Securities, Hammerson, and Liberty International losing 2.8 to 3.9 percent.
Cable & Wireless was the biggest blue-chip faller, down 10.4 percent as a disappointing outlook with its full-year results and market talk of share selling by directors weighed.
The telecoms group posted full-year earnings up 36 percent on Thursday following an operating overhaul and acquisition synergies, and some analysts said the forecast growth for 2010 was weaker than hoped.
There were a handful of blue chip risers, with Friends Provident rallying 0.6 percent after recent falls, while defensive considerations supported Unilever, and Imperial Tobacco, both up 0.3 percent.
Investors looked nervously ahead to UK retail sales data. due at 0830 GMT for more clues on the outlook for consumer spending, particularly following below-forecast results from Marks & Spencer earlier in the week.
