Britain's FTSE 100 index turned sharply lower on Wednesday, reversing earlier gains as some heavyweights lost the right to dividends and crude oil prices crashed.
Losses accelerated mid-afternoon after a University of Michigan survey showed US consumer sentiment was weaker-than-expected in November, tipping US markets into mildly negative territory ahead of the Thanksgiving holiday.
Oil lost as much as $2 a barrel after a strong build in US stockpiles, more than reversing Tuesday's 2 percent rally and hitting the shares of BP and Royal Dutch Shell by 1.2 and 0.4 percent respectively. BG shed 2 percent.
The FTSE lost 42.3 points, underperforming global indices as top 10 members HSBC and Vodafone traded ex-dividend, as did Next, Sainsbury and Scottish Power, accounting for 10 points of the fall.
Together BP, Shell, Vodafone and HSBC represent over a quarter of the FTSE's total value, and traders said their influence was even greater than normal on Wednesday thanks to light trading volumes ahead of the US long weekend. "What looked like a good day has turned very sour," said one trader. "We looked like shrugging off the ex-divs, but oil and US consumer sentiment have really kicked us this afternoon."
US economic worries cast a shadow over the countdown to Thanksgiving, while investors took little heart from minutes of the Bank of England's rate-setting meeting, which showed two policymakers were against November's rate rise.
Economists are divided about whether rates have higher to climb next year, but the prospect of an increase will weigh on retail and banking stocks into the end of the year, traders said. Both sectors ended Wednesday broadly lower.
The FTSE 100 index of Britain's leading shares fell 0.7 percent to 6,160.3, its lowest level in almost three weeks and well below morning highs of 6,233.1. Seventy-two index members fell compared with 25 risers. Four were unchanged.
Leading the pack, Europe's biggest electricals retailer, DSG International, was the FTSE 100's biggest loser, falling 7.3 percent after a trading update highlighted weak margins.
Property company Liberty International shed 5.7 percent as investors bet on earnings dilution after a placing of 25 million shares to pay for debt on the August acquisition of Covent Garden Estates, traders said.
International Power lost 3.6 percent as bid talk around the stock faded, while Scottish Power eased 2 percent as investors worried that valuations could prove too high for take-over suitor Iberdrola.
"There are plenty of nerves about," said a second trader. "Sure there are some specific bad news stories, but it's more of a general sell-off hitting FTSE than any story in particular."
Bucking the trend, ICI hit its highest level since March 2001, up 9.3 percent after Swiss fragrances maker Givaudan said it agreed to acquire rival Quest International from ICI for 2.8 billion Swiss francs ($2.25 billion).
Miners were also broadly supportive as base metals firmed, with Xstrata rising 1.7 percent and Vedanta up 3 percent as traders said it had been oversold in recent weeks. British Airways climbed 2.1 percent, buoyed by lower oil prices and a mooted take-over approach for Australia's Qantas.
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