The City is set for a downbeat start to today's session after stocks in the States slumped, particularly on the Nasdaq, which suffered its worst single-day performance since November 2011.
City sources predict the FTSE 100 will open around 50 points below yesterday's close of 6,641.97.
Gains made earlier in the week on US markets were completely erased as the Nasdaq fell 3.1% to 4,054, its lowest close since early February. Meanwhile, the Dow Jones Industrial Average dropped 1.6% and the S&P 500
declined by 2.1%.
The CBOE Volatility Index surged by 15% during the session.
"It would appear the sell-off in high-growth stocks is far from over," said Market Analyst Craig Erlam from Alpari.
"To be honest, it's probably about time that investors got realistic about the valuations of certain stocks. To some extent, current valuations had priced in either looser monetary policy from some major central banks than is being seen or a superior economic performance," he said.
Spreadex's Samuel Fox said: "The fierce sell-off spread into the Asia overnight with Japanese stocks falling to six-month lows as technology stocks fell. The Nikkei 225 dropped to lows of sub 13,900 before regaining some of the losses towards the end of the session.
"Looking towards the day ahead, we have some high impact data released from the US in the form of PPI and prelim University of Michigan consumer sentiment with consensus forecast at 0.1% and 81.2 respectively."
In Germany, inflation data for March will be released, with analysts predicting that consumer prices increased by 1% last month, easing back from 1.2% in February. The report comes amid concerns of falling inflation in the Eurozone.
Inflation in the euro-area fell to 0.5% in March from 0.7% in February, marking its lowest rate since November 2009.
If Europe's biggest economy registers a decline, it is likely to add pressure on the European Central Bank to ease policy.
In this morning's company news, arch-rivals BT and BSkyB have set aside their differences over TV sports rights to do a joint deal to show European rugby from next season.
Tesco is reportedly planning on launching a high-street takeaway chain to be focused on the London market. The supermarket owner is understood to be in the final stages of a new format called 'Tesco Express food' to compete with the likes of Pret à Manger, Eat and Greggs, according to The Guardian.
Meanwhile, fund manager Jupiter reported a small increase in assets under management (AuM) during its first quarter, with net inflows totalling over half a billion pounds. AuM rose to £32.21bn in the three months to March 31st, up nearly 2% from £31.66bn at the start of the year.