London's leading share index dived nearly 3% as investors were spooked by new record oil prices and US inflation worries.

The FTSE 100 Index plunged 184.9 points to end the day at 6191.6. It brought a shuddering halt to several days of gains as around £43 billion was wiped off the value of Britain's biggest firms.

Losses in London started off early as investors cashed in on the previous day's rises.

But they accelerated during the day thanks to a big early drop on Wall Street as oil neared $130 a barrel and new data showed inflation creeping up in the US.

Jimmy Yates, a dealer at CMC Markets, said the drop was "a correction" after a two-month run which had seen the Footsie claw back almost all of this year's losses.

He said: "Equities have certainly had a good run of late but under the rather cautious current market conditions, a correction was always looking imminent.

"Wall Street is off too and essentially we're just seeing a little heat coming off the market after its recent run higher."

Big losers among London's Footsie firms included high street giant Marks & Spencer, which warned of continued trading difficulties despite racking up more than £1 billion of profits for the first time in a decade. Shares in the retailer fell 5%.

Mining firms, which have a big influence on FTSE movements due to their size, also suffered heavily after one leading City firm said their shares were due for a downward correction in price.

Just three Footsie firms were in the black, including banks Alliance & Leicester and Halifax Bank of Scotland as investors took advantage of recent falls for the stocks to snap up shares.

Oil prices set their new records amid concerns over supply from the major oil producing nations. They are now up a third since the start of the year and weighing down on prospects for economic growth.

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