Billions of pounds were wiped off the FTSE 100 on Tuesday as a major drop in commodity prices hit some of the index’s biggest companies.
The sell-off was global as US traders came back online after a long weekend for the July 4 celebrations.
“Once again, the return of US traders from their holiday has dealt the death blow to hopes of a European market rally that lasts longer than about 24 hours,” said Chris Beauchamp, chief market analyst at online trading platform IG.
“This recurrence of selling has put indices across the board into the red, as growth and inflation fears return right on cue.
“Normally July provides some welcome relief to markets after a choppy June, but so far the instinct to sell any bounce, no matter how small, remains all-encompassing.”
Bottom of the bunch were some of the country’s biggest natural resources giants.
Harbour Energy, an oil and gas company with holdings in the North Sea, saw its shares drop by 9.6%. Fellow oil giants Shell and BP fell by 8.5% and 7% respectively.
It came as the price of Brent crude oil fell by 8.1% to 104.26 dollars per barrel.
Elsewhere, miners Anglo America, Glencore, Antofagasta and Fresnillo all saw big share price drops.
Together they helped push the FTSE down by 207 points, its worst performance since early March.
The 2.9% fall left the index at 7,025.47.
In Europe the Dax closed down 2.9% and the Cac 40 lost 2.7%.
On Wall Street a short while after European markets closed, the S&P 500 was down 1.5%, while the Dow Jones had lost 1.8%.
On currency markets the pound dropped 0.09% to 1.1904 dollars, and was down 0.11% to 1.1621 euros.
The biggest risers on the FTSE 100 were Dechra Pharmaceuticals, up 182p to 3,616p, Segro, up 33.6p to 984.2p, Croda, up 204p to 6,780p, Ocado, up 20.6p to 805.4p, and Spirax-Sarco, up 190p to 10,320p.
The biggest fallers on the FTSE 100 were Harbour Energy, down 33.7p to 316.2p, Rolls-Royce, down 7.4p to 79.12p, Shell, down 187.0p to 2,016p, Anglo American, down 235.0p to 2,605p, and Glencore, down 34.8p to 400p.