The FTSE 100 suffered a huge slump on Friday as the US Dow Jones market lost 2% and oil prices dropped below the $30 per barrel mark for a second time this week.
The London market lost 0.7% in morning trade following the fall in oil prices. But there were further losses in the afternoon as US markets opened considerably lower. The Dow Jones index lost 350 points - or 2% - as trading began in the US.
Mining firms were the biggest fallers on the FTSE 100. Anglo American shares were down nearly 10% and BHP Billiton, which wrote down $7.2 billion worth of US shale gas assets, shares fell 5.9%.
Brent crude oil traded as low as $29.73 per barrel, before settling slightly higher at $29.89. The latest falls mean that oil prices have now fallen 10% this week alone. The latest drop in oil prices hit firms on the FTSE 100, with BP and Royal Dutch Shell shares falling 1.7% and 1.3%, respectively.
The latest fall in oil prices as markets prepare for trade sanctions on Iran to be lifted, which is widely expected to increase the supply of oil. Over supply is largely the reason for the dramatic decline of oil prices over the past 18 months. Opec (Organization of Petroleum Exporting Countries) has so far resisted calls to reduce production, but last week its president said the organisation could hold an emergency meeting to discuss the possibility of reducing production.