Foreign exchange markets were shaken also, with the ruble falling to a historic low against the dollar.
European equities were sliding by 3.0 percent approaching midday, following similar falls across Asia — wiping out the previous day’s rally on hopes of Chinese stimulus.
“It’s not a pretty sight (on stock markets) with every single sector in the red… only serving to prove that yesterday’s bounce was a short-lived relief rally,” said Brenda Kelly, head analyst at London Capital Group.
The International Monetary Fund’s announcement Tuesday that it had downgraded its global growth forecast for this year added to the sense of doom across trading floors.
On Wednesday, New York oil prices hit fresh 12-year lows below $28 a barrel owing largely to a glut of crude that is set to worsen as Iran pumps out extra barrels after the lifting of Western sanctions on Tehran.
The latest slump weighed on share prices of energy companies, while miners suffered also on generally weaker commodity markets.
In London, Royal Dutch Shell shares were down 5.7 percent, while among miners BHP Billiton shed 7.3 percent.
Shell was hit also by the announcement that it expects a sharp decline in full-year net profits, as plunging oil prices slash the earnings of leading energy companies.
The Anglo Dutch group forecast profit after tax of between $1.6 billion and $2.0 billion (1.5 billion euros and 1.8 billion euros) during 2015.
This compares with net profit of almost $15.0 billion in 2014.
Crude futures have lost three quarters of their value since mid-2014, hit by a perfect storm of a supply glut, weak demand, a slowing global economy and a strong dollar.
The slump in prices has slashed income also for oil producing countries within and outside OPEC.
On Wednesday, the dollar climbed past the psychological threshold of 80.10 rubles for the first time, past levels seen at the shock plunge of the Russian currency in December 2014.
The worsening economic outlook amid falling oil prices present a serious challenge for President Vladimir Putin, whose pact with voters has been based on years of economic stability and relative prosperity.
Meanwhile in Asian trading on Wednesday, Shanghai’s main stocks index swung in and out of positive territory before ending the day one percent lower.
The losses were characteristic of the start to a year that has seen world markets slump, wiping trillions off valuations.
With Chinese New Year celebrations approaching, China’s central bank pledged $91 billion in funding support for lenders to provide sufficient liquidity as demand for cash surges.