British stocks had the biggest intraday fall since 2008 and benchmark bond yields turned negative for the first time on Monday on investor fears that the coronavirus outbreak could stall the global economy.
As the worries about the coronavirus outbreak hammered markets, Prime Minister Boris Johnson was preparing to chair an emergency meeting at which more stringent measures to tackle the outbreak will be considered.
The FTSE 100 .FTSE plunged to a three-year low after Saudi Arabia crashed the oil prices by slashing its own selling prices and raising output.
Yields on benchmark British government bonds turned negative for the first time ever as panicked investors rushed to the safety of gilts to hedge against the feared economic shock of the coronavirus.
The 2-year gilt yield GB2YT=RR last stood at -0.032%, down 12.6 basis points on the day. The commodity-heavy FTSE 100 gave up as much as 8.8%, while the domestically focused mid-cap index .FTMC shed 6.1%.
Britain has so far reported three deaths and 278 cases of the new coronavirus. The country's biggest retailer, Tesco, has restricted bulk buying of products such as anti-bacterial gels and wipes, dried pasta and long-life milk.
"The number of coronavirus cases continues to rise in the UK and around the world," Johnson said. "We are well prepared and will continue to make decisions to protect the public based on the latest scientific advice."
The new coronavirus, which emerged in China in December, causes a disease called COVID-19. It has spread around the world, infecting more than 106,000 people and 3,600 people have died worldwide, according to a Reuters tally.
Britain's emergency scientific group agreed last week that the virus was likely to spread in a significant way and the government will decide on Monday whether to move to the so called "delay phase" of its plan.
As some British supermarket shelves were emptied of basics such as lavatory paper, the British government said it had set up a team to tackle "interference and disinformation" around the spread of coronavirus.
The government will hold a conference call with supermarkets on Monday to discuss their response to the virus.
"We are in regular contact with the food industry to ensure it is well prepared to deal with a range of scenarios," the government said.
Britain's finance minister is due to deliver his annual budget speech on Wednesday and investors awaiting any indication of additional stimulus from the Bank of England and the government.
British culture secretary Oliver Dowden said there were no plans to shut museums, art galleries or concert halls, or to order sporting events to be canceled or played behind closed doors.
UK-based airlines easyJet (EZJ.L) and British Airways (ICAG.L) are expected to reduce their flights to northern Italy over the next three and a half weeks after Italian authorities ordered a virtual lockdown of the area.