Scott Reid: Irish jitters hit bank and power shares

The benchmark FTSE 100 index climbed above the 5,600 mark - its highest since late April - before reversing the gains in the wake of Wall Street's opening to finish the session 31.69 points or 0.6 per cent lower at 5,508.45. It marked the third losing session in a row, although the Footsie still ended the week 0.1 per cent higher - its fourth week in positive territory.

US consumer sentiment fell to its weakest level in more than a year, a key survey revealed, as worries over jobs and finances intensified. Earlier, the US government said consumer prices increased slightly more than expected in August, but core inflation was flat.

Banks, which are sensitive to slight changes in risk appetite, accounted for the bulk of the top flight's retreat in London, while other financial stocks also suffered.

Barclays fell 3.2 per cent or 10.1p to 304.65p, Royal Bank of Scotland dipped 0.6p to 47.84p and Lloyds Banking Group shed just under 1p to 75.34p. Hedge fund company Man Group tumbled 4.4 per cent to 225.2p.

Ben Critchley, sales trader at IG Index, said: "After pushing through 5,600, shares in London performed an abrupt U-turn.

"It seems to be new twists on familiar worries nagging traders as concerns there could be more pain to come for some of the euro-region banks continued to weigh."

Energy stocks were also broadly weaker as crude fell by more than 1.5 per cent to below $74 per barrel. BP fell 1.3 per cent to 403.05p.

On a brighter note, Scots power plant supplier Aggreko was the top blue-chip riser, up 4.1 per cent or 63p to 1,613p as Credit Suisse started coverage on the group, albeit with a "neutral" stance.

The market uncertainty meant another strong session for gold as it reached an all-time high of $1,282 an ounce at one stage. Gold has raced higher as investors believe it will keep its value better than currencies.

The dollar in particular has been under pressure amid speculation the US government will print more money under its quantitative easing programme. The greenback was lower against the pound, which also strengthened against the euro.

A broker upgrade for supermarket chain Sainsbury's helped grocery stocks hold on to advances. UBS said it believed Sainsbury's would deliver earnings growth and more than double the dividend over the next ten years. The update saw Sainsbury's rise by 6.6p to 385.4p, rival Tesco lift 1.8p to 428.6p and Morrisons add 1.3p to 298.8p.

In the second tier, Robert Wiseman Dairies fell a further 4 per cent at one stage after admitting on Thursday that strong competition was hurting profits.It later recovered to stand just 0.9p lower at 341.1p.

Pubs group Mitchells & Butlers failed to secure gains seen after it announced a deal to buy 22 Ha Ha Bar & Grill sites, which it will convert to existing brands such as All Bar One and Browns. Shares in M&B rose about 4p, but closed 0.1p lower at 294.4p.