FTSE 100 Index drops more than 80 points over European Central Bank inaction
London's top-flight index was in doldrums as investors remained downbeat after the European Central Bank (ECB) failed to launch a fresh round of monetary stimulus on Thursday.
Inaction from the ECB - including keeping interest rates on hold at 0% - continued to haunt the London market, pushing the FTSE 100 down 81.75 points to 6776.95.
ECB president Mario Draghi said the bank's quantitative easing programme would continue at a rate of 80 billion euro (£68 billion) a month until March 2017, with many economists expecting him to extend the end date.
However, the lack of an indication over a future rate cut was enough to give the UK banks a boost, with Royal Bank of Scotland the biggest riser, jumping more than 2% or 4.6p to 206.7p.
Lloyds Banking Group and HSBC were also in the ascendency, lifting 1.6p to 174.8p and 4.7p to 578p respectively, as banks appeared to escape a further hit to their financial performance caused by even lower interest rates.
Across Europe, Germany's Dax was down 0.95% and the Cac 40 in France was 1.12% lower.
Oil majors were experiencing a torrid session after Brent crude sank by more than 2%.
The price of oil slipped one dollar and 35 cents to 48.64 US dollars a barrel, sending Royal Dutch Shell B 34p lower at 1961.5p and BP down 5p to 432.2p.
On the currency markets, the pound was up 0.2% against the euro at 1.182 euro after surging export sales helped narrow the UK's yawning trade gap in the first month after Britain voted to leave the European Union.
The Office for National Statistics (ONS) said the UK's deficit on trade in goods and services hit £4.5 billion in July, shrinking from £5.6 billion in June.
Support also came from Britain's construction industry, which nudged out a slight recovery in the month following the EU referendum.
The ONS said construction output stalled in July, compared to a 1% drop in activity in June.
However, sterling was down 0.2% against the US dollar at 1.326 US dollars after the greenback strengthened following comments from Boston Federal Reserve president Eric Rosenberg indicating that a US rate hike might not be far away.
In UK stocks, Tesco was struggling following the announcement that t hree former executives at the supermarket had been charged with fraud and false accounting as part of an investigation by the Serious Fraud Office into its accounting scandal.
Carl Rogberg, Chris Bush and John Scouler - the supermarket's former finance chief, managing director and food commercial head respectively - have been requisitioned to appear at Westminster Magistrates' Court on September 22.
Shares were down nearly 3% or 5.1p to 166.1p.
The biggest risers on the FTSE 100 Index were Royal Bank of Scotland up 4.6p to 206.7p, Mediclinic International up 15p to 979.5p, Barclays up 1.6p to 174.8p, and HSBC up 4.7p to 578p.
The biggest fallers were Ashtead Group down 57p to 1233p, Whitbread down 164p to 4020p, Morrisons down 7.4p to 192.5p, and Bunzl down 81p to 2283p.