The FTSE 100 Index lost ground today as gloom in the banking sector and more economic woes across the Atlantic rattled investors.
Record oil prices of more than US$103 (€67.85) a barrel and early losses in New York trading added to uncertainty in London, sending the FTSE 100 Index down 81.4 points, more than 1%, to 5884.3 by the close.
The Dow Jones Industrial Average lost more than 1% after disappointing results from US heavyweights AIG and Dell underlined the current economic difficulties across the Atlantic.
In London, sentiment in the banking sector was impacted by the fall-out from results by Halifax Bank of Scotland and larger rival Royal Bank of Scotland.
HBOS continued to suffer - down another 31.5p to 603.5p - after figures on Wednesday missed expectations and it warned that a slowing UK economy and the impact of the credit crunch would hit lending activity.
And fresh from unveiling £2.5bn (€3.26bn) losses from the credit crunch, RBS came under pressure after Credit Suisse cut its price target on the stock. Shares fell 17p to 385p and dragged Barclays 23.25p lower to 477.25p.
Elsewhere in the financial sector, insurer Admiral Group dipped 30p to 1015p and Royal & Sun Alliance fell 4p to 132p.
Retailers lost ground after a consumer confidence survey registered a 13-year low and highlighted the worst climate for major purchases since December 1990. Argos and Homebase owner Home Retail Group was the biggest casualty with a drop of 10.25p to 259p. Tesco also lost 0.5p to 400.5p.
Oil prices of more than $103 a barrel saw British Airways slip 8p to 257.5p, while transport giant FirstGroup eased 26.5p at 579p.
US-facing building supplies firm Wolseley lost ground amid the jittery mood across the Atlantic. Its shares were 24p off at 621.5p.
Among the Footsie's leading gainers was pest control-to-hygiene firm Rentokil Initial. The company slumped nearly 25% yesterday after warning of significantly lower profits this year, but speculation over a potential break-up of the business meant shares clawed back 2.9p to 83.4p today.
In the second tier, Mecca Bingo owner Rank lost 0.25p to 90.5p despite signs of steadier trading at its bingo clubs. Investors were also encouraged by a deal to transfer its pensions liabilities to an investment firm.
The biggest faller in the FTSE 250 was Helphire Group - off 41% or 118.5p to 172p - after results came in below analyst expectations.
The provider of car rentals for motorists involved in accidents was followed by investment group Close Brothers after it said it was no longer in takeover talks. Shares tumbled 91p to 659p, a drop of 12%.
The Footsie's four biggest risers were Rentokil Initial, up 2.9p to 83.4p, Resolution up 20.5p to 690p, Schroders up 18p to 958.5p and Cairn Energy which closed 36p better off at 2717p.
The four biggest fallers were Yell Group, down 23.25p to 219.25p, Sage Group down 11.75p to 197.5p, ICAP down 33p to 631.5p and HBOS down 31.5p to 603.5p.