Worldwide stock markets have plunged for a second day due to fears around the global coronavirus outbreak.
The FTSE 100 dropped by 0.7 per cent by Tuesday lunchtime, having slipped by 3.3 per cent on Monday.
Monday’s drop was the biggest fall in four years, and it saw more than £62 billion scrubbed from the value of the market index.
Tensions over Covid-19 are rising as Italy scrambles to contain a large outbreak of more than 280 cases in the north of the country and seven deaths.
It comes as Brits have been left trapped in a Tenerife hotel after it was put on lockdown due to an Italian national being diagnosed with the virus.
Coronavirus: Costa Adeje Hotel lockdown in Tenerife
Markets on the continent were harder hit than the UK.
On Tuesday, the Dax in Germany and France’s Cac 40 were 0.9 per cent lower each, having both fallen 4 per cent on Monday.
Spain’s Ibex was also more than 1 per cent lower after news broke of the positive case in the Canary Islands.
There was a slight rise on Tuesday morning as traders looked to take advantage of the previous day’s low prices.
The gentle upswing was also thanks to a cautious rise on the Hang Seng index in Hong Kong overnight.
But investors soon continued heading for the exit as it became clear the outbreak is far from being contained and will take a heavy toll on the global economy.
The FTSE 100’s woes were also compounded by gains for the pound on hopes of a major fiscal spending boost in next month’s Budget.
Sterling lifted 0.3 per cent to 1.30 US dollars and 0.5 per cent to 1.20 euros.
Michael Hewson, chief market analyst at CMC Markets, warned there was likely to be further stock market uncertainty to come as the outbreak develops.
He said: “There is no question financial markets are coming round to the realisation that this particular crisis is likely to have a slightly longer shelf life than many thought was the case a couple of weeks ago.
“There appears little prospect that financial markets look likely to settle down in the short term, which means investors will have to get used to an extended period of uncertainty and volatility."
Travel stocks and airlines were once again among the biggest losers in London, following steep declines in Monday’s market falls.
Holiday giant TUI and low-cost carrier easyJet fell another 3 per cent and 2 per cent respectively, while Holiday Inn owner Intercontinental Hotels Group was 1 per cent down.
British Airways owner International Airlines Group was nearly 1 per cent lower after falling more than 9 per cent on Monday.
