FTSE: 5,775.24 (–53.43) Mid-250: 11,349.66 (–59.87) Small Cap: 3,189.36 (–32.27): WORLD MARKETS followed Tokyo's Nikkei index into the red yesterday as shares suffered further declines in the wake of the Japanese disaster.

London’s FTSE 100 closed down nearly 1 per cent, down 53.43 points to 5,775.24, having held its nerve for most of the day until a late-session sell-off sparked by heavy falls on Wall Street.

The Dow Jones Industrial Average in the US dropped more than 140 points in early trading, while markets across Europe also fell despite a weekend agreement on a broad package of measures to ease the euro zone debt crisis.

There were significant losses for some of Japan’s leading companies amid fears about the economic impact of Friday’s disaster, including power shortages that could disrupt factory output.

Oil prices fell on expectations that weaker Japanese economic output will depress demand for crude. The price of Brent crude dropped to around $113 a barrel.

However, the price of liquefied natural gas (LNG) for summer delivery has leapt 7 per cent since Friday to 65pence a therm – the highest since October 2008 – as fears mounted that imports to Britain would be hit as cargoes are diverted to Japan.

The spectre of higher gas prices saw shares in London alternative energy stocks jump higher, with coal-fired UK energy producer Drax soaring as much as 7 per cent at one stage. It later stood 12.4p higher at 408.7p, a gain of 3 per cent.

Gas exploration giant BG Group was also higher, up 4 per cent or 54p at 1514p, as wholesale gas prices rose. Other risers included temporary power supplier Aggreko, which climbed 8 per cent or 116p to 1523p on expectations its generators will be in demand throughout Japan.

However energy and mining engineering company Amec, which provides services to the nuclear sector, suffered a 3 per cent drop, down 37p to 1115p.

The biggest fall in London’s top flight came from Burberry, which generates a large slice of its sales from Japanese customers. Shares were 4 per cent lower, off 51p to 1123p, although broker Nomura noted that the company was well placed to plug the gap following recent strong growth in China.

It was another weak session for retailers as analysts continued to fret about rising costs and consumer confidence. BQ owner Kingfisher fell 3.5p to 236.5p, and Next fell 32p to 1868p. – (Reuters)