Australia slid 2.5% to 5,084.

U.S. stock futures fell (http://www.marketwatch.com/story/stocks-eye-a-reprieve-despite-mortal-blow-from-chinese-data-2015-08-21) ahead of Friday’s session. In the US, Federal Reserve member Dennis Lockhart is scheduled to speak in Berkeley after the London market closes.

Factory activity in the world’s second largest economy, China, shrank at its fastest pace in more than six years in August.

‘We always thought something would get in the way of the Fed raising rates in September and we’re perhaps seeing this now, ‘ Deutsche Bank’s Jim Reid said. However, the index has since been plagued by political instability in Greece and the slowdown in China. “As a result, markets pushed back the expected date of the first rise to December”. Investors also also be looking ahead to the Jackson Hole Symposium, starting on Thursday, for insight into the sentiment of Fed officials, though Fed Chair Janet Yellen will not attend.

The Chinese authorities have intervened numerous times to try and arrest the share sell-off – the latest measure allowing the state pension fund to invest up to 30% of its assets in Chinese stocks.

“The volatility index has now doubled in less than three trading days, and this is a clear example that panic rather than prudence is driving traders’ thinking”, highlighted IG’s McCaig. In a sea of red on trading screens, Royal Mail was the only blue-chip riser yesterday.

The only riser was More Than insurer RSA, on reports that Zurich Insurance wanted to extend the timetable to make a formal £5bn offer for the company.

Today’s slump – which follows stock market scares in China – has already been dubbed Black Monday by analysts online.

It combined with the effects of western sanctions earlier this year to push the country into recession. The cut to the revenue guidance means the group now expects its revenue and earnings before interest, taxation, depreciation and amortisation growth to be 4% to 6% for the full year.

Oil-related stocks fell as crude prices CLV5, -2.78% continued to lose ground, hurt by demand prospects for the commodity. The FTSE 250 lost 2.8% and the FTSE All-Share was 3% weaker. In a short statement, UTV said the talks are “ongoing” and there is no certainty they will lead to a transaction being agreed.

The fall was exacerbated, analysts said, by a lack of further stimulus from China’s central bank which many had expected over the weekend to help support the flagging economy.