London's blue chips fell 122.65 points or 2.2 percent to 5,421.57, echoing similar falls across the globe as investors deserted riskier assets on concerns a Greek 'no' vote could be catastrophic for the euro and the banking system.
"By calling a referendum, Papandreou has given 12 million Greeks a decision that has massive and potentially devastating ramifications for the 500 million inhabitants of the European Union," Louise Cooper, markets analyst at BGC Partners, said.
The Greek government faced possible collapse after Prime Minister George Papandreou shocked investors and angered fellow EU leaders by letting Greeks vote on the 130 billion euro ($178 billion) bailout package, with voters already deeply disenchanted with austerity measures.
Expressing concern at Papandreou's snap decision to call a referendum, Jean-Claude Juncker, the chairman of the Eurogroup countries said Greece could face bankruptcy if the population ends up voting against the bailout.
German and French leaders are due to meet their Greek counterparts ahead of the G20 summit on Thursday.
Having gained just over 8 percent in October, the UK's benchmark has fallen 5.1 percent in three trading days and back into the range -- 5,000 to 5,450 -- that it had previously struggled to breakout of between August and October, when investors were baying for politicians to bring an end to the euro zone debt crisis.
With gains having been capped at the 200-day moving average of around 5,710 on Thursday, the FTSE is now attacking the 50-day moving average support level of around 5,310. For the latest updates on the stock market, visit Stock Market Today For the latest updates PRESS CTR + D or visit Stock Market news Today
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