US gloom weighs on FTSE

London stock markets resumed their downward trek today, knocked by volatile oil prices, a tumbling dollar, jitters around banks and more gloom on Wall Street.

The FTSE 100 clung on to early modest gains for a few hours before tumbling with other European markets and remaining deep in the red once US markets opened sharply lower. Choppy oil prices added to the uncertainty, and General Motors rattled frayed nerves even further with news of its biggest ever quarterly loss.

At 6pm the London bluechips index was down 54.8 points, or 0.9%, at 6,420.1, although the market's closing auction was delayed by data delivery problems.

Rises for energy companies and gains for some miners on the back of climbing metal prices were outweighed by more bad news from British Energy, a fall for ITV and another slump for embattled bank Northern Rock.

High street chain Next was also headed sharply lower after its cautious comments and news of a "disappointing October". Laying out its cloudy outlook, the retailer flagged up the belt-tightening effects of recent interest rate rises and that helped knock its shares 138p, or 6.7%, to £19.14.

Elsewhere in the retail sector J Sainsbury remained under pressure following the collapse of the 600p-a-share offer from Qatar-backed consortium Delta Two. The grocer lost another 19p to 426p.

British Energy was the day's biggest faller behind Northern Rock after it conceded it had no restart date for its nuclear reactors. The shares fell 40p, or 7.2%, to 515p. They have lost more than 10% since British Energy announced that two of its nuclear power stations were out of service after a problem was discovered at one of its units.

As the US dollar plunged against the pound and euro, oil prices pushed through $98 a barrel at one point before slipping back. That helped Royal Dutch Shell but knocked heavy fuel users like British Airways, down 19.5p at 369.5p.

Shell rose 17p to £20.26 but its rival BP was down 9.5p at 624p after it said its Norwegian unit will shut its Valhall oilfield from Thursday night due to a storm in the North Sea.

Elsewhere in the energy world, International Power was up 14.75p to 476.75p, Scottish & Southern Energy was up 14p to £15.59 and gas producer BG Group rose 4.5p to 901p.

Metal prices were also headed higher and helped some miners notch up some solid gains. Rio Tinto, up 16p at £43.50, was helped by ongoing rumours of a possible bid from BHP Billiton, down 19p at £17.56.

Anglo American rose 19p to £31.71 but other miners succumbed to profit-taking and pressures from the wider market.

Banks were still under pressure from the latest bad news at the world's largest financial insitution, Citigroup. Barclays fell 10.5p to 513.5p, Royal Bank of Scotland lost 17.75p to 438p and troubled Northern Rock slumped 12.1p, or 7.4%, to 152p.

ITV shares sank to their lowest since the merger between Carlton and Granada which created ITV plc. The fall of 3p, or 3.1%, to 92.8p came as the shares went ex-dividend and as it emerged that the broadcaster wanted satellite company BSkyB to sell its entire 17.9% stake in the business.

Elsewhere in the sector, newspaper group Independent News & Media was in focus after it emerged that Irish telecoms billionaire Denis O'Brien had raise his stake o 11% from 10.3%. The London-listed shares were down 0.14p at 2.22p.

David Elstein, chairman of DCD Media has also been dipping into his pockets, buying 525,000 shares in the TV production company at 58.5p after strong results this week. The shares added 0.5p to 59.5p.

Among the midcaps, one of the biggest risers of the day was CSR, the Cambridge company with a large share of the Bluetooth wireless technology market. Its shares jumped 74.5p to 664.5p after it reported record revenues for the third quarter and sounded an upbeat note about future trading.

Dan Ridsdale, analyst at Landsbanki noted an unexpected improvement in gross margin to 48.2% from 45.5% last quarter.

"We retain our view that CSR is executing well and that at the current rating... the share price factors in a lot of the risk and little of the potential. We retain our buy recommendation," he said.

Among the smallcaps, engineering specialist Senior was in favour early on after saying prospects "remain encouraging" despite the impact of a weak dollar. But the shares gave up early gains and ended the day down 1p at 126.5p.

Fellow smallcap Kiln, the Lloyd's of London insurer, jumped 7.5p, or 7.7%, to 105p after it unveiled a share buyback worth up to £60m.

Moving to junior market Aim, recruitment company Imprint was up 3p, or 2.7%, to 112.75p after recommending a £42.8m takeover offer from OPD. That follows a higher offer from rival Hydrogen, which ended unchanged at 270p.

Finally, marketing company Tangent Communications added 0.75p, or 6.1%, to 13p after results for the six months to end-August showed a 169% leap in underlying profit to £1.41m.