Sliding oil prices and a return to April lows for sterling left UK stocks vulnerable to volatile moves on Wednesday, with energy stocks and banks exerting downside pressure.
Nymex West Texas Intermediate, the US crude benchmark, slid into bear market territory on Tuesday, having fallen 20% from its last cyclical peak in May.
ICE Brent crude, the global oil benchmark, has fallen 18% since its last cyclical peak.
On Wednesday, WTI was down 0.2% at $43.43 a barrel, its lowest since November, while Brent was down 0.4% at $45.84 a barrel and also a November low.
Fears of oversupply have dogged the oil market for more than three years and even moves by Opec, in league with Russia and other non-cartel members, to limit supply have failed to put a long-term floor under prices.
Reports of an unexpected supply increase from Libya – an Opec member – have put oil prices under pressure in the past couple of trading sessions.
"Investors who were ardently waiting for signs of Opec’s strategy to balance the saturated markets are starting to lose patience, which is reflected in the bearish price action of oil," said Lukman Otunuga, research analyst at FXTM.
Growth fears hit pound
Sterling, meanwhile, slipped to its lowest levels in seven weeks on rising concerns that protracted Brexit negotiations will undermine UK growth.
Indeed, the Mark Carney, Bank of England governor, believes interest rates will need to be kept on hold amid Brexit uncertainty.
Some market observers even think the central bank may need to supply more stimulus before it thinks about tightening policy.
"Our expectations are that the next Bank move is towards more accommodation rather than tightening as the economy is likely to slow down further," said Sam Hill, senior UK economist at RBC Capital Markets.
The pound was down 0.2% on Wednesday at $1.2603 against the dollar, and is down 1.3% this week, and nearly 14% this year.
Volatility hits stocks
Stocks have proved resilient amid sterling's losses this year. A weaker pound leads to more profitable exports and many internationally-focused stocks have benefitted.
The FTSE 100 is up nearly 20% this year, but in recent sessions more volatility has been evident. On Wednesday, the benchmark index fell 0.3% to 7,449.
Oil stocks have been vulnerable in recent sessions as crude prices have tumbled. BP was down 0.5% on Wednesday, having fallen 3.3% in the last three days. Royal Dutch Shell was down 0.3% to £21.20, having fallen 2.6% in the last three sessions.