Monetary chief Ben Bernanke doused market euphoria over the pace of the US recovery today by warning over the impact of rising oil prices.
The inflationary pressures flagged by the Federal Reserve chairman were taken as a sign that further stimulus measures for the US economy were unlikely unless there is an unexpected downturn in activity.
Mr Bernanke’s testimony prompted a sharp reversal of fortunes in global markets, with the FTSE 100 Index closing 56.4 points lower at 5,871.5.
In corporate news, ITV set the pace at the top of the blue-chip risers board after full-year profits rose 24% to £398million and it said it continued to make progress with its five-year turnaround programme. Shares were up 7% or 5.45p to 85.95p.
British Airways owner International Airlines Group said it was facing a challenging first half of the year, but still impressed investors by reporting a sharp jump in full-year profits. Shares were 1p higher at 164.2p.
Outside the top flight, shares in bus and coach operator National Express were up 5% or 12.3p to 233.5p after full-year profit improved 12% to £180.2million, while housebuilder Taylor Wimpey was 6% lower at 49.7p despite announcing its first dividend payment since 2007.
The biggest FTSE 100 risers included Capita ahead 16p at 767p, Intertek up 4p at £23.15 and Bunzl ahead 17.5p at 962p.
The biggest fallers were Essar Energy down 8.5p at 104.9p, Weir Group off 99p at £21.06, Vedanta Resources down 62p at £14.40 and Rio Tinto off 146.5p at £35.84.
Steven McKay, of investment manager and financial planning specialist Brewin Dolphin in Aberdeen, noted that the day’s fallers included BP, off 1.4% at 492.4p and Aberdeen Asset Management 5% lower at 240.55p.
The day’s risers included Stagecoach, which added 1.3% to 267.9p, and Xcite Energy which gained 4.7% to close at 139.1p.