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Having failed to break back above the psychologically important 6,000 level earlier this week, the FTSE 100 gave up 2.4% to 5,759 points by midday dragged down by house builders, financial and travel stocks.
Markets were waiting for the latest US weekly jobless claims, estimated to be 2.5m for the week to 9 May, marking a third month of massive job losses.
Prudential was the worst large-cap performer, losing 6.2% to £10.23 after it reported a 24% fall in Asian sales in the first quarter led by a 50% fall in sales in Hong Kong.
This outweighed news that Asian sales had improved since the first quarter thanks to new technology which allowed agents to socially distance from customers, and that US sales were up sharply last quarter.
Asset manager M&G, spun off from Prudential last year, was the second-worst FTSE performer down 5.7% to 112p, while rival insurer L&G lost 4.4% to 186p.
Property firm Land Securities continued to lose ground after Tuesday's poor trading update, falling a further 5.5% to 515p, and house builders Barratt Developments, Berkeley Group and Persimmon lost 5% apiece despite the housing market reopening from this week.
Retailer WH Smith fell 6% to 860p as it warned of a hit to current trading from COVID-19 as the vast majority of its stores at airports and railway stations remain closed, with travel revenue down 91% in April.
The firm said it had modeled various downside scenarios using 'severe but plausible assumptions' and believed it had sufficient financial resources to weather the downturn, helped by a £162m capital raise last month.
Pub owner Marston's was 2% lower at 29.4p having agreed £70m of additional liquidity through an increased bank facility.
It announced that it planned to pay no dividends for the financial year 2020, citing continued uncertainty surrounding the re-opening of the pub sector.
On a more positive tone, infection prevention and control technology company Byotrol soared 18% to 5.57p as it said it expected to report record first-quarter sales, after confirming it had secured two new license agreements.
3i was buoyed 5.6% to 792p as the company trimmed its dividend after annual returns and net asset value fell.
It said the Covid-19 pandemic had a 'significant impact' on the value of its private equity portfolio.
Hargreaves Lansdown added 3.5% to £16.47 as the wealth manager announced its intention to stick with its dividend policy for the 2020 financial year, despite a decline in assets as falling stock markets offset a rise in new business wins, denting growth.
For the four-month period to 30 April 2020, assets under administration fell to £96.7bn from £97.8bn on-year and revenue rose to £190.2m from £159.5m.
Sirius Real Estate was buoyed 2% to 66.5p after the German business park investor reported that rent and service charge collection was at 98.8% of normal levels in April and confirmed that it intends to maintain its dividend policy of paying at least 65% of funds from operations.
Grainger rose 1.7% to 249p after the property company increased its interim dividend as net rental income jumped, although profit fell on lower revenue in the first half of the year.
For the six months ended 31 March 2020, pre-tax profit fell to £49.6m from £54.3m on-year as revenue slipped to £86.9m from £107m, but net rental income rose 27% to £37.0m.