As sterling soared against the dollar, and trouble brewed in US markets, London’s top companies were left as the biggest losers on a bad day for global investors.
The FTSE 100 index ended the day down by 1.4%, or 93.75 points, to 6617.15.
The pound hit an almost three-year high on Thursday, and was trading at around 1.3954 against the dollar, a rise of 0.7%. It also gained 0.3% against the euro, ending the day at 1.1554.
When the pound rises it often puts pressure on the FTSE, whose components trade heavily in dollars.
But traders in London were also taking their cues from their international counterparts, not least in the US, where the Dow Jones retreated from an all-time high that it had hit on Wednesday.
The Dow was trading down by 0.8% when markets closed in Europe, and its fellow New York index, the S&P 500, had lost 0.9%.
“A combination of doubts introduced by the Dow Jones, and the ascension of sterling, left the FTSE as far and away Thursday’s worst performer,” said Spreadex analyst Connor Campbell.
“With sterling’s surge creating a nightmare for its numerous multinationals, the FTSE sank by 1.6%, leaving it precariously balanced a couple of points above 6,600.
“It has now more than wiped out the explosive growth that opened the week, returning the UK index to where it closed last Friday.”
The early week surge was created by optimism surrounding the UK’s progress on vaccinations.
France’s Cac index lost 0.7%, while the Dax in Frankfurt closed down 0.1%.
Among London’s companies, investors rewarded Moneysupermarket with a 7% rise in its share price even after it revealed an 11% revenue fall due to Covid travel restrictions which ate into demand for travel insurance.
A Valentine’s Day surge for card retailer Moonpig means its revenues will now double during the current financial year, it revealed on Thursday, sending shares up more than 5%.
Shares in Barclays however fared worse, closing the day down 4.4% despite resuming dividend payments and announcing bonuses for staff and a share buyback for shareholders.
Recruiter Hays closed down 3% after the news that pre-tax profit had slipped by nearly four-fifths in the most recent six month period.
Brent crude oil traded up 0.2% at 64.45 dollars per barrel.
The biggest risers on the FTSE 100 were Auto Trader, up 10.6p at 603.8p; Sage, up 8p at 604.2p; Ashtead, up 342p at 3,914p; Barratt Developments, up 6.4p at 686.4p; and Kingfisher, up 2.2p at 277.6p.
The biggest fallers were Rolls-Royce, down 8.96p at 93.34p; Smith and Nephew, down 92.5p at 1,475p; Imperial Brands, down 84p at 1,421p; Barclays, down 6.86p at 147.5p; and BP, down 11.2p at 269.4p