Britain's top share index fell 2.5 percent early on Wednesday, snapping a six-day rising streak, as the focus returned to the slowdown in the global economy after investors digested Barack Obama's U.S election victory.
By 0903 GMT, the benchmark FTSE 100 lost 118.88 points to 4,520.62. The index recorded its highest closing level in four weeks at Tuesday's close, but is still down nearly 30 percent for the year amid a global equity slump.
Energy stocks tumbled as crude oil prices fell nearly $3 to $68. Prices retreated after a spate of profit taking following signs that Saudi Arabia and other OPEC member countries had made promised cuts in crude production. BP, Royal Dutch Shell, BG Group and Cairn Energy fell between 2.5 and 4.7 percent.
Royal Dutch Shell also traded ex-dividend.
"There's been a bit of profit taking after the fantastic rise since the market bottomed out last week," said Jim Wood-Smith, head of research at Williams De Broe in Exter.
"Obama is seen as anti-big oil so the market is seeing reason to take profit in oil majors."
Miners also took a beating on falling metals prices. Kazakhmys, Vedanta Resources, Xstrata and Lonmin fell between 4.1 and 7 percent. A price target cut from Morgan Stanley also weighed on the stocks.
British mid-market fashion retailer Next fell 3 percent, as investors reacted negatively after the company said it expects full-year profits to be in line with expectations.
OBAMA VICTORY
Obama's U.S election victory brought to an end uncertainty over who will lead the world's largest economy at a time of financial turmoil.
Analysts said construction and infrastructure stocks are potential gainers from an Obama win, with European commercial banks set to benefit from opportunities to acquire U.S regional banks.
Other possible gainers include healthcare equipment and insurance firms, while a strong dollar would be good for European exporters, analysts said.
Insurers Prudential and Aviva advanced 2.2 and 1.4 percent respectively. But Old Mutual shed 6.4 percent after going ex-dividend and after Morgan Stanley downgraded the stock to "equal-weight" from "overweight".
Unilever slipped 2.6 percent after going ex-dividend.
U.S stocks had their biggest election rally ever on Tuesday, while Asian shares hit a three-week high after the election results.
Mid-cap British broadcaster ITV lost 7.2 percent, after it said trading conditions were likely to remain challenging in 2009.
