Disappointing nuclear news from British Energy, miners smarting from falling metals prices and more heavy selling on Wall Street darkened the mood in London again on Monday.
The FTSE 100 started the week on the backfoot as traders reacted to last Friday's shock plunge in New York and fresh falls there today. The index of leading shares fell more than 100 points early on before paring some of those losses to end the day down 68.6 points, or 1.1%, at 6,459.3.
There was little UK corporate news to trade on and so market players took cues from the US, where the mood was gloomy again after disappointing earnings reports from some big hitters such as Citigroup and Bank of America last week alongside unrelenting concerns over the extent of problems in credit markets.
By the time London closed, the Dow Jones Industrial Average was down around 60 points, or 0.5%, at 13,460 but the Nasdaq composite index rose, thanks largely to gains for technology giant Apple ahead of its results.
Back in the UK, British Energy was the biggest faller on the FTSE 100, plunging 47p, or 8.1%, to 532p after it warned that the reopening of two nuclear power plants had been delayed.
Mining stocks took up most of the spots on the market's worst performers board as economic worries prompted a flurry of metals selling, knocking back the prices of copper, nickel, aluminium and even traditional safe-haven investment, gold.
Copper-focused Kazakhmys was the hardest hit, down 79p, or 5.2%, to £14.55. Antofagasta lost 38p, or 4.6%, to 780.5p, Vedanta Resources fell 109p, or 5%, to £20.54 and Lonmin shed 144p, or 4.1%, to £33.61.
No assets seemed immune from the economic fretting today and after scaling new heights last week, oil tumbled back down below $87. BP slipped only 6p to 605p, however, while Royal Dutch Shell fell 30p, or 1.5%, to £20.21. Tullow Oil fell a sharper 5.8%, or 36p, to 585.5p after investment bank UBS downgraded the stock to a "sell" recommendation from "neutral".
Moving to the financial sector, insurer Resolution had stood out early on among the FTSE 100's handful of risers. As speculation intensified about a possible bid from Standard Life it climbed to a six-year high before slipping back. The rumours of interest from Standard Life are making the proposed merger between Resolution and Friends Provident look increasingly unlikely and are the latest in a flurry of reports about potential suitors. Shares in Resolution closed down 4p at 718p while Standard Life slipped 9p, or 3.2%, to 276p and Friends Provident edged down 0.8p to 166.2p.
Most financial stocks were under pressure after Credit Suisse lowered its 2008 earnings forecast for the UK banks sector by about 14%. Analysts at the investment bank said yields were strong but leverage in balance sheets, likely increased scrutiny by regulators and limited earnings growth would curb significant dividend increases in the near term.
Troubled bank Northern Rock was the morning's top performer after Friday's announcement that chariman Matt Ridley was resigning to be succeeded by Bryan Sanderson, a former chairman of Standard Chartered Bank and Bupa. The Newcastle-based bank announced today that Mr Sanderson's appointment had got the approval of the Financial Services Authority. But the shares' gains were short-lived and they ended down 1.5p, or 0.8%, at 185.4p.
Among the risers, Financial Times publisher and Penguin owner Pearson was one of the strongest performers after an upbeat trading update. The newspaper, book publisher and education specialist said it traded strongly through the third quarter, "building on a good first half." The shares were up 11p, or 1.4%, at 776p.
A smaller player in the sector, Huveaux publishing group was up almost 10% after revealing several takeover approaches. The owner of Letts revision guides was up 2.75p at 30.75p after it said it "has received preliminary approaches from a number of private equity houses in relation to a possible offer". Analysts believe an offer would be pitched somewhere between 33p and 37p per share.
Among the mid-caps, casino and bingo company Rank continued its downward path, falling another 5p, or 4.8%, to 98.5p. The group behind Mecca bingo halls said earlier this month that it had been hit harder than expected by the smoking ban and new gaming regulations. The cloudy outlook dented bid speculation surrounding Rank and its shares are now down 58% from the start of the year.
Analysts at Dresdner Kleinwort believe Rank continues to look expensive but at just £400m market capitalisation, "it may now be an attractive bid target, in particular for Ladbrokes and William Hill."
"Revenue and cost synergies could be significant," they addded in a note, raising their recommendation on Rank's shares to "hold" from "sell". They kept a 105p target price.
Elsewhere on the mid-cap market, kitchen equipment manufacturer Enodis was the top riser on rumours of a possible bid and thanks to an upbeat note from Investec. The shares rose 22.2p to 211p.
Cooker maker Aga, which failed to buy Enodis last year, was headed the other way. The group was hit by analyst downgrades after selling some of its business last week and the shares ended down 15.25p, or 3.6%, at 411.5p.
Among the small-caps, children's character specialist Entertainment Rights was up 1p, or 4.6%, at 22.75p. The group, which owns Postman Pat, Rupert Bear, Basil Brush and the Lone Ranger, told the market that two recent key trade shows brought "unprecedented demand" for its brands and content. It said television, licensing and merchandising markets were "extremely buoyant".
Following the update, Altium Securities reiterated a view that Entertainment Rights' stock "is substantially undervalued at current levels and that recent price weakness is unjustified."
"We would particularly cite the group's organic growth prospects, the value of its commercially attractive portfolio of children's and family content (we calculate a replacement cost of around £900m) and the precedent set by historic acquisitions in this space," said Altium's Roddy Davidson.
Finally, Aim-listed First Property Group was up 2.75p, or 15.7%, at 20.25p after it predicted full-year results will be "significantly ahead of expectations". The company, which specialises in property asset management, flagged up a strong economic backdrop in Poland with the property market there appearing to be largely unaffected by the credit crunch.