FTSE 100 and pound end Monday's session lower
(Close): London's stock market fell more than 1% in a widespread sell-off, while the pound flirted with its lowest level against the euro since Brexit.
The FTSE 100 ended down 91.39 points, or 1.32%, at 6,818.04, with only a few stocks rising.
Intercontinental Hotels was the biggest faller, dropping 6% after Morgan Stanley cut its rating on the stock to "underweight" from "equalweight".
Lloyds Banking Group was another company to suffer from a downgrade.
It fell 3% after Goldman Sachs downgraded the bank's shares to "sell" from "neutral".
Banking stocks across Europe were also under pressure after shares in Germany's Deutsche Bank fell 7% to their lowest level since the 1980s. The bank's shares were hit following reports at the weekend that the German government had ruled out state aid for the company.
"Since its peaks last October Deutsche Bank's share price has fallen over 60% reflecting increasing investor disquiet about its ability to deal with its problems at a time of negative rates, shrinking profitability, no dividend and the prospect of tighter capital rules," said Michael Hewson, chief market analyst at CMC Markets UK.
"While one can understand the reticence of German politicians to bailout yet another bank, particularly in the lead up to an election next year, one has to question the wisdom of articulating that reluctance out loud when markets are already nervous about Deutsche Bank's capital position."
Sports Direct was down 6% as the fall out continues over the resignation of its chief executive last week and his replacement by founder and major shareholder Mike Ashley.
On the currency markets, the pound weakened on worries over the form that the UK's exit from the EU would take.
Against the euro, sterling was trading down 0.3% at €1.1518, regaining a sliver of earlier losses that took it near to its lowest since the Brexit vote, while against the dollar it was up 0.16% at $1.2986.