After a turbulent week of trading, the FTSE100 closed down 1.06% at 5354.7. It's been a bad day for the market, dogged by poor performance from the miners, EDF's pullout in British Energy and a rebound in oil prices pulling down the shares of energy firms.
Centrica, which had planned to take a minority stake in British Energy following a takeover by EDF, was the day's biggest faller. One strategist said a possibility of a windfall tax on energy firms also meant that Centrica, which owns British Gas, took a hit yesterday. Shares dropped 5.6% or 17.7p to 297p.
A bounce in the oil price also added to panic and heightened inflation concerns, which also weighed on the UK market. BP, Royal Dutch Shell, BG Group and Cairn Energy were all down, shedding between 0.1% to 3.1%.
On the wider FTSE 250 index, Debenhams saw a 5.5% jump to 43p after Milestone Resources, an investment group linked to Dubai-based retailer Landmark, raised its stake to 10.2%.
Next week's interest rate decision by the Bank of England will be a major determinant of market performance and analysts are bracing themselves for more tough trading.
"We're in for thinner volumes as the summer holiday season continues and the heightened levels of volatility are unlikely to disappear any time soon," said Jimmy Yates at CMC markets.
