On the day when core UK inflation dipped to its lowest level since records began, there was precious little good news for investors in UK equities.
Sentiment in the stock market never looked like overcoming the ever-increasing concerns about the oil crisis, with political concerns now added to the hand-wringing over corporate profits.
Compounding the worries about oil prices was another dismal showing by sterling. The pound dropped to a 14-year low against the dollar, although it continued to appreciate against the euro.
The FTSE 100 index finished the session a net 26.5 off at 6,555.5 - its sixth consecutive decline. At its worst the 100 index fell 53.5 to 6,528.5. There were hefty losses too for all the other indices.
The 250 index dipped 46.4 to 6,907.7, having slipped below the 6,900 level to hit 6,892.8. The FTSE SmallCap retreated 36.6 to 3,571.0, only a fraction above the day's lowest point. The Techmark 100 staged an impressive rally during the afternoon to finish only 26.07 down, having threatened to slide below the 3,900 level at its worst when it touched 3,904.65.
The fall in headline inflation to 3 per cent and in underlying inflation to 1.9 per cent (this figure only started to be calculated in the mid-1970s) did little to cheer investors, reflecting as it did a fall in petrol prices in August which has since been reversed.
Wall Street's overnight performance was unhelpful for London, with 29 points off the Dow Jones Industrial Average and another 82 points off the Nasdaq Composite. Further early weakness in the Dow yesterday also brought pressure to bear in UK markets.
Dealers said the market had become increasingly unsettled by press and television coverage of the long queues at petrol stations; "these are things that everyone thought were consigned to the past; the government will get the blame and that could undermine the market".
While some viewed recent events as likely to drag the market down further, others still maintained the market offered good value. "The 100 index has fallen around 250 points in a couple of weeks, which seems too much," said one salesman. He said the concerns about profit warnings had been overdone and that the potential for further corporate activity had been forgotten.
Turnover was 1.54 billion shares.
