The London market slumped yesterday as record rises in oil prices and the US current account deficit combined with a profits warning from General Motors to shake confidence.
The FTSE 100 Index nearly doubled early losses during the afternoon to stand 62.6 points off at 4937.6 by the close.
The price of a barrel of US light crude climbed to an all-time high of $56.25 a barrel shortly after the session ended in London.
Analysts said concerns about oil supplies were likely to continue weighing on equities.
General Motors dismayed Wall Street by announcing it expected to make a first-quarter loss due to lower sales and price cutting.
The Dow Jones Industrial Average fell in sympathy, losing 86 points to 10659 shortly after London's close.
Heavyweight oil firms BP and Shell both lost ground following the Opec announcement, slipping 6.5p and 4.25p to 560.5p and 488.75p respectively.
A string of financial stocks were heavily in the red as they went exdividend, meaning investors no longer have the right to recent payments.
The biggest Footsie loser was Lloyds TSB, off six per cent, or 33.75p to 474.25p, while Royal & Sun Alliance weakened 3.5p to 80.75p and HBOS slipped 33p to 821.5p.
Other firms going exdividend included tobacco firm Gallaher, falling 29p to 752.5p.
Smiths Group was also among the Footsie fallers, off 12p at 830p, despite raising its interim dividend by six per cent.
After benefiting from the Opec decision and potential relief from higher fuel costs, British Airways lost 5.75p to 266.5p.
However, BAE Systems bounced 3.5p to 255.5p after extra defence spending was unveiled in the Budget.
In the FTSE 250 Index, property developer Crest Nicholson leapt nearly ten per cent, or 37.25p to 434p, after rejecting a preliminary takeover approach from its biggest shareholder as too low. Crest's rivals also benefited, with Barratt Developments adding 25p to 661p and Bellway up 31p at 894p.
Entertainment group Chorion advanced six per cent, or 20p to 331p, after reporting a 35 per cent hike in annual profits.
Lender Provident Financial lifted 32p to 710p as a hike in foreign lending helped offset tough conditions in the UK credit sector and contributed to a seven per cent rise in profits to £220.7 million.
But newspaper publisher Johnston Press retreated 22p to 541p despite celebrating an 18 per cent rise in profits after seeing revenues grow by more than expected during 2004.
Retailer Peacock soared nearly 17 per cent, or 41p to 289p, after revealing that it had received a takeover approach.