Moderate losses in early trading on Friday turned into a steep sell-off by the close as markets ended August in a cautious mood following a choppy week.
A series of closely-watched economic indicators from the States prompted a negative reaction this afternoon, causing a weak start on Wall Street as investors trimmed positions ahead of a long three-day weekend - US markets will be closed on Monday for Labour Day.
Second-quarter US economic growth forecasts were revised higher yesterday, building the case for the Federal Reserve to scale back quantitative easing at its next meeting in September. Today's data however will complicate matters somewhat - US consumer confidence declined in August, while consumer spending and consumer incomes rose less than forecast in July.
"With a raft of important US economic announcements due next week it seems that markets are content to wait until we see the latest ISM, ADP and employment reports which are all due out in the coming days," said Senior Market Analyst Michael Hewson from CMC Markets.
Meanwhile, the outcome of the debate over whether to launch a military strike in Syria still remains a concern for markets after UK Prime Minister David Cameron lost an initial vote to intervene - oppositions decided to wait for firm evidence from UN inspectors on the alleged use of chemical weapons by the Bashar al-Assad regime.
In contrast, French President Francois Hollande signalled that he could be the main ally to the US in taking action against the Syrian government, saying that the UK vote made no difference to France's position.
FTSE 100: G4S' recent strength continues
There were only a handful of stocks in positive territory on the FTSE 100 by the close of trade, yet security solutions group G4S was extending gains made earlier this week when it announced plans to sell assets to reduce its debt pile and issue new shares
to help strengthen its balance sheet. G4S has gained by around 15% over the last month alone and has now erased all of the losses experienced earlier in the year.
JPMorgan Cazenove kept an 'overweight' rating on the shares saying that there could be upside to current forecasts on the back of the company's revenue growth potential and new business opportunities.
Outsourcing giant Serco was rebounding after a heavy fall yesterday after confirming that it is under investigation because of a "misreporting of data" in connection with it prisoner escort contract with the Ministry of Justice. Shares dropped 11% the day before after it said it would forgo any past and future profits on the £285m contract.
Telecoms giant Vodafone was continuing to rise after yesterday's impressive surge following the confirmation that it is in talks about selling its 45% stake in Verizon Wireless to US partner Verizon. The sale could generate up to $130bn for the UK group, reports have suggested.
Burberry was also higher on positive readacross from some better-than-expected interim earnings figures out from French luxury peer Hermes.
Among the worst performers was Vedanta as mining stocks tracked metals prices lower. Anglo American dropped on reports that it could close or sell off mines at Anglo Platinum (Amplats) if the division doesn't see improving profits next year. Meanwhile, Rio Tinto was down on concerns over delays to its Simandou iron ore project in Guinea.
Energy stocks were also providing a drag on the Footsie today as oil prices
pulled back from hitting a two-year high earlier in the week. Shell, BP and BG Group were all out of favour this afternoon.
FTSE 100 - Risers
G4S (GFS) 260.00p +3.38%
Serco Group (SRP) 547.50p +1.67%
Vodafone Group (VOD) 206.25p +0.73%
Antofagasta (ANTO) 855.00p +0.71%
Burberry Group (BRBY) 1,534.00p +0.26%
Babcock International Group (BAB) 1,138.00p +0.18%
Aggreko (AGK) 1,627.00p +0.12%
FTSE 100 - Fallers
Petrofac Ltd. (PFC) 1,385.00p -2.67%
WPP (WPP) 1,195.00p -2.61%
Aviva (AV.) 386.80p -2.54%
Melrose Industries (MRO) 294.40p -2.45%
GKN (GKN) 328.00p -2.32%
Prudential (PRU) 1,078.00p -2.27%
InterContinental Hotels Group (IHG) 1,803.00p -2.17%
Vedanta Resources (VED) 1,162.00p -2.11%
International Consolidated Airlines Group SA (CDI) (IAG) 286.30p -2.09%
United Utilities Group (UU.) 678.50p -2.09%
FTSE 250 - Risers
Ocado Group (OCDO) 330.50p +5.25%
Polymetal International (POLY) 755.50p +3.42%
JPMorgan Indian Inv Trust (JII) 296.50p +2.60%
COLT Group SA (COLT) 104.50p +2.55%
Micro Focus International (MCRO) 791.50p +2.46%
Domino Printing Sciences (DNO) 668.50p +2.37%
Euromoney Institutional Investor (ERM) 1,202.00p +1.86%
Bumi (BUMI) 217.60p +1.63%
African Barrick Gold (ABG) 190.00p +1.60%
Electrocomponents (ECM) 259.40p +1.37%
FTSE 250 - Fallers
Bwin.party Digital Entertainment (BPTY) 110.00p -13.59%
Evraz (EVR) 125.00p -6.72%
Kazakhmys (KAZ) 301.50p -3.49%
Essar Energy (ESSR) 127.50p -3.48%
Imagination Technologies Group (IMG) 247.00p -3.48%
Brewin Dolphin Holdings (BRW) 263.20p -3.24%
Petra Diamonds Ltd.(DI) (PDL) 120.10p -3.22%
Salamander Energy (SMDR) 128.00p -3.10%
Wetherspoon (J.D.) (JDW) 710.00p -3.07%
F&C Asset Management (FCAM) 97.00p -2.90%