The FTSE 100 plunged sharply in morning trading, as banks and mining stocks dragged the index down.
The index dropped more than 25 points (0.50%) to 5,056.90.
Lloyds banking group fell 3.34% to 99p as Alistair Darling pledged afresh to cut down on bank bonuses. Kazakhmys shares dropped 3.13% to £10.22 after the price of commodities fell back.
Wolseley headed up the winners table, adding 6.42% to £13.93. Despite the Builders supplies specialist recorded losses in excess of £1bn last year, the company reported underlying profits ahead of forecasts.
Pharma performed well with AstraZeneca up 1.56% to £27.94 after the US appeal court upheld the company's infringement claim against generic competitors, while GlaxoSmithKline added 1.38% to £12.44.
Elsewhere, Home Retail Group declined 3.88% to 274p.
The Dow Jones also posted sluggish trading, down 42.45 points (0.44%) to 9,665.19, with food giants McDonalds and Coca Cola leading the pack. McDonalds rose by 1.48% to $56.95, while Coca Cola is up 1.20% to $52.97.
Aloca Inc is down 3.18% to $13.08, and Wal-Mart down 2.43% to $49.47.
The Nikkei 225 index closed down 256 points (2.5%) at 10,010 in Tokyo as the yen rose to an eight-month high against the dollar.
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