US Edition Worries about the global economy and concerns over banking giant Citigroup heightened recession fears in London, driving the blue-chip index down to 3780.96. The year's previous low was on October 27, when the FTSE 100 finished at 3852.59.
Profit-taking ahead of the weekend saw defensive investments faring the worst, with AstraZeneca losing 214p to £22.45, GlaxoSmithKline retreating 80p to £10.72 and Shire falling 58½ to 838p.
John Haynes, senior equity strategist at Rensburg Sheppards, said: "It's learned behaviour. Every time people try to bargain-hunt, the market falls again so until there is stability for a time, people will continue to be cautious."
In the water sector, Severn Trent gave up 72p to £11.17 and United Utilities lost 33½ to 598½p.
British American Tobacco, also perceived to be a strong defensive investment, fell 82p to £15.90.
Fund managers and insurance companies remained under pressure on lingering concerns over the falling value of equity and bond portfolios. Schroders lost 52½ to 635½p and Old Mutual tumbled 3.9 – almost 8pc – to 45p.
Also suffering was tour operator Thomas Cook, which lost 10.2 – or 7.4pc – to 127.6p on worries about the financial health of its major shareholder Arcandor. Rumours did the rounds yesterday that the German holding company could sell its stake.
Property companies also slid after analysts at broker Collins Stewart issued a bearish note on the sector. "Three factors have deteriorated since our price targets were last updated: debt availability and cost, occupier financial health and expected direct property yield shift," they wrote. "As share price fundamentals continue to deteriorate we estimate around 20pc further downside in the UK majors."
Hammerson plunged 45 – or 8.5pc – to 480p and British Land retreated 25½ to 463p.
Among the second-liners, oil explorer Soco International fell 18p to £11.40 despite talk that Chinese suitor Sinochem is getting closer to tabling a formal offer for the company. In October, The Daily Telegraph revealed that Soco had received an approach, which the company later confirmed, adding that it was "a very preliminary approach regarding the sale of a majority of the company's asset portfolio".
It is understood that Sinochem is now carrying out due diligence on Soco after pitching an indicative offer at around £24 a share. Should Sinochem press ahead, some sources believe a deal could be announced at the end of November or early next month. However, others said it was unlikely that Sinochem would table an offer at around £24, given the current financial turbulence, and would probably lower any bid.
Elsewhere, deal talk failed to buoy Northern Foods, which produces brands including Goodfella's pizzas and Fox's biscuits. The shares slipped 4¼ to 50p despite rumours that private equity firm Duke Street Capital, which owns Burton's Biscuits, is eyeing the company's biscuits division. Duke Street has appointed corporate finance boutique Stamford Partners to advise on consolidation opportunities in the sector, said sources. The private equity firm is thought to have held talks with Northern Foods in the past about acquiring Fox's.
Bankers said Duke Street may now be interested in an asset-swap deal that would involve exchanging sandwich-maker Buckingham Foods for Fox's Biscuits.
Reports that Greek lottery group Opap may be interested in acquiring Ladbrokes or William Hill did nothing to help the shares. William Hill shed 3¾ to 161p, while Ladbrokes slipped 4¾ to 156¼p. This may be because Opap is more interested in smaller high street betting outfit Paddy Power, which rose 0.31 – or 2.6pc – to 11.82p.
Miners reversed this week's bruising sell-off as demand for raw materials stabilised and pushed some metals prices slightly higher. Vedanta Resources topped the blue-chip leaderboard, rising 62 to 450p. Chilean copper company Antofagasta also gained 35 to 354¾p, Anglo American put on 78p to £11.32 and BHP Billiton perked up 45 to 979½p.
Banks also fared relatively well as their futures were seen as slightly more secure after shareholders backed fund-raising plans. Royal Bank of Scotland rose 1.4 to 47.4p. Its shareholders approved plans for a government-backed bail-out on Thursday.
Barclays, whose shareholders vote on capital-raising plans next week, jumped 5½ to 133.2p, and HBOS climbed 1.3 to 73.3p. Lloyds TSB shareholders this week approved its acquisition of HBOS.
Oil services business Wood Group benefited from Goldman Sachs adding the company to its conviction buy list. "We believe the company is well placed in a slowing demand environment, with over 50pc of revenues coming from maintenance-related activities." The shares rose 7 to 190p.
Retailer DSG International also reversed steep falls earlier in the week after Credit Suisse advised that "the risk of a near-term financial failure is... being over discounted by the market and we believe management will reassure on its financial position at the interims next week." The shares rose 2.24 to 13p.