The week has kicked off on a "negative" start as a "result of poor sentiment coming from the US and China", according to analysts.
It comes as recession fears spook investors as they price a series of rate rises, with central banks remaining under pressure to alleviate the cost of living crisis.
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Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown, said: "In the US, the trend has been negative for weeks, but had started to look brighter, before comments from the Bank of England at the end of last week about weak economic growth applied the brakes to momentum."
"The optimism that followed the US Federal Reserve meeting last Wednesday feels a long way off on Monday as the FTSE 100 dropped to its lowest levels since mid-March," said Russ Mould, investment director at Aj Bell.
"The continuing impact of Beijing’s zero-COVID policy in China and concerns about the Fed’s next moves are helping to pile the pressure on markets.
It comes as Britain announced a fresh round of sanctions against Russia and Belarus, targeting £1.7bn ($2.1bn) of trade.
The new measures affect goods including platinum and palladium, which are used to make computers and mobile phones, the Department of International Trade said. It also hiked import tariffs on a range of goods by 35 percentage points.
The move takes the total value of products subjected to UK embargoes to more than £4bn.
Anne-Marie Trevelyan, secretary of state for international trade, said: "We are determined to do our utmost to thwart Putin’s aims in Ukraine and undermine his illegal invasion, which has seen barbaric acts perpetrated against the Ukrainian people.
"This far-reaching package of sanctions will inflict further damage on the Russian war machine."
Oil prices fell as Japan became the latest in the G7 to ban imports of Russian oil. While the move could take some time to implement, prime minister Fumio Kishida said it was an "extremely difficult" decision, but that G7 unity was important. Japan imported 3.6% of its crude oil from Russia in March.
Across the pond, US benchmarks slumped as investors attempt to gauge the economic impact of the Federal Reserve’s plans to continue hiking rates.
The selloff dragged Wall Street’s S&P 500 (^GSPC) shed 115.89 points, or 2.8%, to 4007.45. The tech-heavy Nasdaq (^IXIC) declined 3.7% as rising yields hit technology and growth stocks. The Dow Jones (^DJI) lost 1.9% at London's close.
Overseas markets were mixed overnight as China’s tightening lockdown in Shanghai and Beijing stoked concerns about global economic growth and recession. MSCI’s broadest index of Asia-Pacific shares excluding Japan was down 1.4% on the day.
It came as export growth in China slumped to its slowest level since June 2020 as the fallout from Beijing's zero-COVID policy adds to global economic woes. Exports in dollar terms expanded 3.9% in April compared to the year before, a sharp decline from the 14.7% growth reported in March. Imports improved slightly from a 0.1% fall in March.
The trade sector accounts for about a third of the country's total gross domestic product.