Stocks fell across the board after Iran’s no-show at oil talks in Qatar sparked a failure to agree an output freeze.
The FTSE 100 Index dropped 41.59 points to about 6302, the FTSE Aim All-Share fell 0.9 points to 731 and the FTSE Aim 100 was 5.5 points off at 3444.
Iran decided against sending a minister to the Doha meeting at the last minute, effectively scuppering chances of a deal to limit production and underpin oil prices.
Its move meant Saudi Arabia was even less likely to push ahead with a reported plan to freeze oil prices in tandem with Russia.
That led to stalemate and a failure by the meeting as a whole to forge any sort of consensus over a plan to restrict output.
Craig Erlam at foreign exchange trader Oanda said: “The inability of the other oil producers even to agree on a loose commitment to freeze output for now says a lot I think.“
The news sent oil prices tumbling, with a barrel of Brent crude losing 4.3% to US$41.32 and West Texas Intermediate dropping 4.8% to US$38.5.
Oil stocks large and small were in the doldrums, with BP PLC (LON:BP.) down 7.8p at 348.15p and Royal Dutch Shell Plc (LONRDSB) shedding 51p to 1768.5p.
Enquest PLC (LON:ENQ) leaked 3.75p to 28.25p, Chariot Oil & Gas Limited (LON:CHAR) backtracked 0.5p to 9.5p, Premier Oil PLC (LON:PMO) reversed 4.25p to 48.25p and 88 Energy ltd (LON:88E) eased 0.08p to 2.04p.
Elsewhere, drug giant AstraZeneca PLC (LON:AZN) fell 2p to 4144.5p as a Sunday newspaper report claimed the drug giant had held informal talks with US cancer drug developer Medivation Inc (NASDAQ:MDVN) about a possible takeover offer.
It came after Medivation was reported to have rejected an approach from French group Sanofi SA (EPA:SAN).
Market gossips reckoned Sanofi had tentatively offered about US$60 a share and was mulling upping its offer to US$65, valuing the group at about US$11.1bn.
AstraZeneca was rumoured to be considering pitching any bid it may make around the same level.
Credit Suisse has suggested that Medivation, which has a market capitalisation of US$8.7bn, could be worth up to US$75 a share, making it worth about US$12.8bn.
Medivation and AstraZeneca have both declined to comment on the unconfirmed speculation.
Back in the small-cap arena, shares in GCM Resources PLC (LON:GCM) were again racing despite a lack of news from the Bangladesh-focused company.
Its shares were 5.5p or nearly 41% up at 19p. The group said on April 12 that it was unaware of any reason for a previous rise in its shares that day, except to say it was confident of reaching a deal with the country’s government to allow its Phulbari coal scheme to proceed.
UK-based oil & gas company Hurricane Energy PLC (LON:HUR) advanced nearly a quarter, or 2.38p, to 12.62p as it announced annual results.
Nyota Minerals Ltd (LON:NYO) hardened 0.03p to 0.16p after it reported progress in forming a new board of directors and said it was considering a move into the financial technology sector.
MARKET PREVIEW
The FTSE 100 is set for a sharp fall when it opens later after the world’s major oil nations failed to agree a production freeze.
Spread betters reckon index of blue chips stocks will fall around 70 points to 6,273.75.
Asia’s markets were hard hit by what was effectively a shambles of a meeting in the Qatar capital Doha when Iran decided at the last minute not to send a delegate.
In Japan the Nikkei 225 fell more than 3% as investors also factored in the impact of Friday’s earthquake. The Shanghai Composite was off 1.7%, while in Hong Kong the Hang lost 1.3%.
Brent Crude tumbled 4% to US$41.41 a barrel, while West Texas Intermediate dropped below US$40 to US$38.59.
“An agreement [in Doha] always seemed highly doubtful when Iran had said it would not freeze out, having just come out of sanctions and Saudi Arabia said it wouldn’t if Iran didn’t,” said Jasper Lawler of CMC Markets.
“Still, the fact that the meeting went ahead appeared to leave the door open to at least some sort of face-saving, unbinding agreement.
“As soon as Iran shunned the meeting by not sending its oil minister it was an un-done deal.”
The big scheduled news of the week here in the UK comes from the major miners Rio Tinto, BHP Billiton and Anglo American, which have trading statements.
Later today we will hear from Centrica (LON:CNA) and Reckitt Benckiser (LON:RB.).