The FTSE 100 Index extended its losses for the week to more than 5% today after heavyweight energy stocks were hit by a fresh fall in the price of oil.
Tullow Oil and oilfield services firm Petrofac slid by as much as 4%, while BP and Royal Dutch Shell were down by around 2% after Brent crude set a new five-and-a-half year low of 63 US dollars a barrel.
The FTSE 100 Index was 84.2 points lower at 6377.7, a drop of 1.3% and meaning the blue-chip index has lost more than 350 points since Monday.
Investors were also spooked by more worrying economic news from China, with growth in factory output declining further in November.
The figures from the world’s second largest economy had an impact on mining stocks, with BHP Billiton off 30.75p at 1330.25p and Rio Tinto down 57p to 2691.25p.
The shortened risers board was led by water companies after the industry regulator Ofwat told firms to cut household bills in real terms by 5% over the next five years.
The decision confirms a provisional determination in August and was met with relief by investors in Severn Trent and United Utilities as the pair’s shares rose 49.5p to 1965p and 28.5p to 900.5p.