A volatile session saw the FTSE 100 Index fluctuate between positive and negative territory today as the fall-out from falling oil prices continued.
Brent crude dipped below 60 US dollars a barrel for the first time since 2009, meaning the energy industry benchmark is now down by about 50% since the summer amid concerns about weakening demand and oversupply.
The slump has been worst felt in Russia, where a sudden hike in interest rates from 10.5% to 17% overnight failed to prevent a fresh decline in the value of the rouble, which stood at a new record low.
The FTSE 100 Index, which is at a low for the year after a fall of more than 8% in December, fell another 12.7 points to 6170.3 amid turbulent trading.
The performance masked an earlier rise of 70 points as investors went searching for cheap looking stocks after £112 billion was wiped from the value of blue-chip shares during last week’s worst showing in three years.
There was some cheer for the UK after inflation fell to a 12-year low in November as lower food and petrol prices kept a lid on the cost of living.
Analysts forecast interest rates may now be on hold for longer but this failed to spook the pound, which was up nearly 1% against the US dollar.
IHS chief UK economist Howard Archer said: “Given very low oil prices, the ongoing supermarket pricing battle and soft import prices, consumer price inflation looks poised to imminently dip below 1%.”
The fall in the price of oil to below 60 US dollars a barrel failed to dent share prices in the commodity sector, although BP was down another 5.5p to 367.7p as it is exposed to Russia through its Rosneft investment.