Oil prices jumped to a new record today in New York as the US reported of a steep drop in crude inventories, coupled with a surge in refinery activity.

Light, sweet crude for September delivery rose 24 cents to $78.45 a barrel on the New York Mercantile Exchange after rising as high as $78.77 earlier.

That beat the previous intraday record of $78.40, set in July 2006.

On the other side of the petroleum supply chain, refineries are producing more gasoline. That news sent September gasoline futures down 1.57 cents to $2.0902 a gallon on the Nymex.

In the equities markets, London's blue-chip index closed sharply lower, with Cadbury Schweppes falling more than 8 per cent after disappointing earnings news and fears the £7 billion sale of its drinks arm will be derailed by the current credit market chaos.

At the close, the FTSE 100 index was down 109.5 points at 6,250.6, off a low of 6,187.2. The FTSE 250 index closed 148.6 points lower at 11,188.

Wall Street traded tentatively, as the market tried to balance continued worries about US home loans and the credit market, against stronger-than-expected profit news.

By the London close the Dow Jones had edged up 8.30 at 13,220.30, while the Nasdaq Composite lost 11.11 to 2,535.16 and the S&P 500 index lost 1.80 to 1,453.45.

Back in London, Cadbury Schweppes was the biggest blue chip casualty, shedding 51p to 569p, after the firm reported a decline in first half earnings as increased investment and higher input costs impacted margins.

Pretax profit before exceptional items came in at £110 million, down from £123 million a year earlier and at the bottom end of market expectations.

Merrill Lynch said Cadbury’s operating performance was weaker than anticipated, and retained its ’neutral’ rating on the stock.

British Airways lost 2.9 per cent after it was hit with almost £270 million in fines from US and UK authorities for price fixing on fuelsurcharges.

Elsewhere, a weak banking sector weighed on the blue-chips, with HBOS down 27.5p at 942p, as concerns about the group’s retail business overshadowed the largely in-line performance for the group as a whole in the second quarter.

Other banking issues also stood out on the downside, reflecting the equity market slide, with Northern Rock losing 35.5p to 781p, RBS off 13.5p at 579p, and Barclays down 21.5p at 677.5p.

The Nikkei 225 index in Asia ended 377.91 points weaker at 16,871.0. Hong Kong's Hang Seng lost 729.6 points at 22,455.4.

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