Britain's top share index ended 2.4 percent lower on Friday as fears over the fate of banking giant Citi and nervousness about the global economy gripped investors, leading them to sell relatively risky equities. The FTSE 100 closed down 94.03 points at 3,780.96, and is down 11 percent on the week and 41 percent this year.
Shares in embattled No 2 US bank Citigroup tumbled for a fifth straight day as chief executive Vikram Pandit tried to play down speculation that the banking giant may sell major businesses. Defensive pharmaceuticals were hit as the sector which had held up reasonably well suffered amid a broad sell-off. Heavyweights AstraZeneca and GlaxoSmithKline slid 8.7 and 6.9 percent.
"With big banks being pushed towards the wall, people are keeping hold of their money," said John Haynes, senior equity strategist at Rensburg Sheppards. Energy stocks slid with oil prices holding below $50 per barrel as fears intensified that a deep global recession will crimp demand. BP fell 0.4 percent, Royal Dutch Shell lost 2.9 percent, and Tullow Oil fell 1.9 percent.
Miners were the top gainers following a week of bruising losses in the sector, as demand for raw materials stabilised and pushed metals prices slightly higher. Vedanta gained 16.1 percent, topping the list of FTSE 100 gainers. Xstrata, BHP Billiton, Anglo American, Antofagasta added between 4.8 and 11.2 percent.
UK banks also fared relatively well as their futures were seen as slightly more secure. Royal Bank of Scotland gained 3.9 percent, with its shareholders having approved plans for a government bailout on Thursday. Barclays, which will see its shareholders vote on capital raising plans next week, rose 3 percent, and HBOS put on 1.8 percent.
However stocks typically seen as safe havens were among the heaviest losers. Heavyweight Vodafone slipped 7.7 percent and National Grid fell 7.2 percent, retreating from Thursday's gains after its well-received first-half results, as HSBC cut its rating to "neutral" from "overweight".
Water group Severn Trent lost 6.1 percent, extending weakness from Thursday's downgrade by Merrill Lynch. Tobacco stocks were also out of favour, with British American Tobacco down 4.9 percent, and Imperial Tobacco off 3.6 percent. UBS cut its price target for Imperial Tobacco to 1,700 pence from 1.945.
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