Share prices look to end the week on a jittery note as Gadaffi troops launch an assault on the Libya oil port of Ras Lanuf, Japan suffers a devastating earthquake and Chinese inflation and industrial production exceeded forecasts in February.
Adding to the gloom on the economic front UK February factory gate inflation hit a 26-month high in due to surging oil prices, adding upward pressure to interest rates.
Fourth-quarter construction output was revised up slightly, with a minimal impact to GDP.
Already unnerved by a big sell-off in the US overnight in the wake of an unexpected increase in jobless claims and continuing concerns over eurozone debt problems, the FTSE 100 index had fallen a further 40 points to 5,805 by 10am and the Mid-250 index had lost 94 points to 11,428.
Dixons Retail softened 0.48p to 17.080p as Citigroup downgraded its rating to hold from buy.