Leading shares lost yesterday's gain and much more today, thanks to a combination of factors.
There was some profit taking in the miners, not to mention financial shares suffering from more credit jitters, as well as an uncertain start on Wall Street. The US market was hit by a sharp fall in housing sales in August and news that consumer confidence was at a two year low, an unexpectedly poor result.
The IMF did not help things either, with a gloomy assessment of the current global economy because of the current credit crunch.
Yesterday the mining giants were boosted by hopes that BHP Billiton would announce it was sitting on the world's biggest gold deposit when it updates its reserve figures tomorrow. Investors were also more upbeat then about the state of the economy which would lift demand for commodities, but the IMF seems to have put paid to that, for the moment at least.
But what goes up, comes down and today BHP lost 39p to £17.11, while Antofagasta fell 53.5p to 789.5p and Vedanta Resources dropped 145p to £20.90. Rio Tinto was 113p lower at £40.91 despite continuing talk that BHP might be planning a bid.
Among the banks Barclays sank another 18p to 598p. Dealers said it was being hit by reports that it might have to sell FirstPlus, its sub-prime consumer loan business, at less than the £4.5bn value of its loan portfolio. Later the division's boss reportedly said Barclays was still committed to the business. Apart from the sub-prime worries, there is also the continuing uncertainty about the auction for Dutch bank ABN Amro, which the rival consortium led by Royal Bank of Scotland seems increasingly likely to win. RBS slipped 5p to 510p.
Traders also suggested there was some switching from domestic banks to those exposed to emerging markets, which helped lift Standard Chartered by 10p to £16.05. Standard also benefited from a positive note from Merrill Lynch.
Meanwhile struggling Northern Rock fell 8.9p to 163.1p after a BBC report that it planned to postpone its controversial dividend payment after all.
Oil giant BP slipped 17p to 572.5p after new chief executive Tony Hayward reportedly told a staff meeting in Houston that its third quarter figures would be "dreadful". According to the Financial Times, Hayward also said he planned to streamline the company's organisational structure.
Royal Dutch Shell was down 34p to £20.42 following reports that Kuwait wanted to drop the company as a partner in a $5bn refinery project in China.
So by the close the FTSE 100 had fallen 69 points to 6396.9.
Among the mid-caps, Bluetooth specialist CSR fell 38p to 582p. The company, which has issued two profit warnings recently, said chief executive John Scarisbrick is leaving after 18 months in the job.
Engineering group Invensys lost 25.75p to 291.5p after analysts at UBS cut its price target.
"We have lowered our 2008-10 earnings estimates by around 7% following first quarter results in August and lower our price target to 430p (from 455p)," said the bank. "Our estimates have been lowered in Process Systems, Controls and Eurotherm offset to some extent by upgrades in Rail Systems. We have also raised our interest charges in 2009 to reflect the fact that it will be harder for Invensys to refinance the high yield bond than previously anticipated."
FKI was down 2.5p to 88.75p on fears the US housing market slowdown could affect is plans to sell its American hardware business.
There were some bright spots.
Hedge fund group Man added 11.5p to 534.5p in the wake of an upbeat trading statement,
Shore Capital said: "Today's update from Man Group is encouraging and helps put concerns over the group's performance during the US sub-prime crisis and resulting credit crunch in some context."
Elsewhere oil services business Abbot was 6.5p better at 281.5p on vague bid talk.
There was a real takeover proposal. Logistics group Christian Salvesen accelerated 13.25p to 64.75p after revealing two approaches, with analysts tipping one of them as supply chain specialist Wincanton, up 0.75p to 380p. Deutsche Post or private equity were also mentioned as possibilities.
Douglas McNeill, transport analyst at Blue Oar Securities, said: "The bidders have chosen their moment well to approach Salvesen, following a period of share price weakness. Salvesen needs a period of painful restructuring, but it has an undervalued property portfolio and strong cash flow. That combination has obviously turned heads, and they may well turn out to be from the private equity world."
Australian coal miner Caledon Resources rose 3.25p to 38.75p. The company sold more than 60,000 tonnes of coking coal in September, and announced the delivery of bolting equipment to complete its new mining system.
Insurer Gable Holdings edged down 0.5p to 12.5p despite the company - which specialises in the building and construction sector - announcing half year profits of £425,000 and issuing a positive outlook statement.
The fall at property group Erinaceous continued. Its shares lost another 1.75p to 56p as it delayed interim results due today and said it was still talking to its lenders concerning possible breaches of credit agreements.
Finally salvage specialist SubSea Resources sank 53% to 1.125p after it reported full year losses of £17.9m, up from £3.8m. The auditors said its funding requirements "indicate the existence of a material uncertainty which may cast significant doubt on the ability of the group to continue as a going concern."