Political uncertainty in France and the Netherlands threatened to derail plans to stabilise the eurozone and triggered a rout on world markets today.
The FTSE 100 Index fell 106.6 points to 5,665.6 after Dutch Prime Minister Mark Rutte tendered his government’s resignation following the collapse of key budget cut talks, firing the starting gun on an election.
In France, Nicolas Sarkozy came second in the first round of the presidential election to socialist rival Francois Hollande, who plans to renegotiate a European agreement designed to tackle the debt crisis.
The fall of nearly 2% wiped £27.6billion from the value of London’s leading shares index.
The uncertainty in the eurozone rocked the banking sector, with Barclays dropping 4%, or 9p to 204.6p, Royal Bank of Scotland losing 0.9p to 23.1p and Lloyds Banking Group falling 0.7p to 29.4p.
The heavily-weighted mining sector was also hit after figures revealed China’s manufacturing sector was still in decline. Vedanta Resources dropped 6% or 70p to £11.67, while Rio Tinto shed 171p to £33.76.
Transport group Stagecoach saw shares slip after it revealed a slowdown in sales growth in recent weeks. The Perth-based company said profits over the coming year would at least hold steady but shares fell 5.5p to 247.6p.
Shares in Greene King were 1.5p lower at 517.5p despite revealing higher like-for-like sales in the 13 weeks to April 15.
The only Footsie risers were BSkyB up 4.5p at 679p and Smiths Group ahead 4p at £10.52.
The biggest Footsie fallers included International Consolidated Airlines Group off 9.2p at 162.6p and Prudential down 37p at 725.5p.
Steven McKay, of investment manager and financial planning specialist Brewin Dolphin in Aberdeen, noted that Parkmead rose 1.4% to 18.875p and AG Barr added 0.1% to close at 1,184.5p.
On the faller’s board, Xcite Energy shed 3.2% to 104.5p and Weir Group closed the day 3.1% lower at £16.47.