Dragged down by losses in real-estate and travel stocks, the blue-chip FTSE 100 index was down 1.9%.
The domestically-focussed mid-cap FTSE 250 index slid 1.5% to a more than three-week low as banks <.FTNMX8350>, industrials <.FTNMX2720> and retailers <.FTNMX5370> declined.
A media report said Prime Minister Boris Johnson was being put under pressure for a new lockdown with the government working on the assumption the second wave of the coronavirus will be more deadly than the first.
"The problem with the second wave is that although we are far better prepared than we were for the first wave, the reality is that the first wave occurred late in the traditional flu/cold/virus season," Deutsche Bank's Jim Reid wrote in a note.
"The second wave still hasn't even hit November or December yet and we're still seeing cases soar in many places."
The market has come under pressure this week on concerns that the new restrictions across parts of England would derail a nascent economic recovery.
Meanwhile, UK Vaccine Taskforce Chair said on Tuesday the first generation of vaccines "is likely to be imperfect", a day after a study found that antibodies against the coronavirus declined rapidly in the British population during the summer.
Brexit talks were also in focus, with a report saying European Council President Charles Michel warned that trade-negotiations were at their most difficult stage.
In company news, shares of Aston Martin rose 7.7% after it said Daimler unit Mercedes-Benz would lift its stake in the British carmaker to up to 20% by 2023.
Kaz Minerals jumped 9.2% after it agreed to be acquired by a consortium led by its chairman in a 3 billion pound deal.
(Reporting by Devik Jain in Bengaluru; editing by Uttaresh.V and Aditya Soni)
By Devik Jain