FTSE 100: 7364.56 ▼ -60.84 (-0.82%)
Update: The pound has surged after prime minister Theresa May called for a snap general election, sending the FTSE 100 further into the red.
May called for a general election on 8 June, saying it was the only way to 'guarantee certainty and stability for the years ahead is to hold this election and seek your support for the decisions I must take'.
After a sharp sell-off ahead of May's announcement, the pound reversed course, surging to $1.265 against the dollar, from a low of $1.252 ahead of may's statement.
That heaped further pressure on the FTSE 100, already weighed down by bearish sentiment sparked by rising geopolitical tensions.
The UK blue-chip index was trading 119 points, or 1.6%, lower at 7,210 points. A stronger pound tends to hamper the index, whose members rely on overseas markets for around three-quarters of their revenues.
‘The pound was the big winner from news that a UK general election is in the pipeline, as currency markets bet on the current government winning a greater majority,' said Laith Khalaf, senior analyst at wealth manager Hargreaves Lansdown.
'Markets can get a case of the jitters in the run up to elections, but this one may be different seeing as it comes in the wake of the Brexit vote, and the polls suggest the incumbent government is likely to remain in power and gain more seats,' he added.
'Markets do not like uncertainty,' said Adrian Lowcock, investment director at Architas. 'The market has begun to price this in and there is likely to be an "uncertainty discount" on the UK stock market until the election result is known.'
Luke Batholomew, investment manager at Aberdeen Asset management, said it would 'take investors some time to digest the effects of the election in the next few days'.
'A big factor for them is whether the election will make a softer stance on the Brexit negotiations more likely,' he said.
'The election should hand Theresa May a much bigger mandate to stand up to the harder line, anti-European Union backbenchers who currently hold a disproportionate sway over her part's stance on Brexit. That would be welcomed by financial markets.'
Almost every single FTSE 100 stock was in the red in a broad-based sell-off. Miners were the worst hit, amid record steel production and rising iron ore stockpiles in China. Fallers included:
Oil stocks were also in the red, as the price of Brent crude fell from last week's highs, down 0.4% at $55.12 on an expected surge in US shale output. Shell (RDSb) was down 2.3% at £21.42 while BP (BP) fell 3.2% to 456p.