Oil fell back below $100 a barrel and commodities were also on the slide driving down oil and mining stocks and weighing down the FTSE.

By 10.40am, the FTSE 100 was down 18 points at 5526.6 with Vedanta Resources, the Indian miner, and Cairn Energy, the Indian oil explorer, leading the way, down 6 per cent at £18.89 and 5 per cent at £25.70 respectively. BP was down 2 per cent at 501.5p.

The top gainer was Rentokil Initial, up 21 per cent at 88p as the top management were replaced by former ICI bosses, triggering hope of a big shake-up and even a break-up of the business.

Better than expected February retail sales helped lift Marks & Spencer 2.4 per cent to 387.75p. It was also raised by announcing a joint venture deal with its franchise partner COMS of Eastern Europe, which runs 13 M&S stores there.

HBOS shares recovered some of yesterday’s sharp falls after it denied rumours it was in financial trouble, adding 3.4 per cent to 636.5p.

Man Group lost 2.7 per cent to 517p after Landsbanki cut its price target to 622p to reflect the lower value of its 18 per cent stake in MF Global, whose shares have been knocked by credit crunch fears.

Rolls-Royce lost 2.6 per cent to 397.75p as Evolution warned that delays to Boeing's787 Dreamliner programme could cut about £100 million off its 2009 earnings.

Carphone Warehouse rose 1.75 per cent to 276.25p after it agreed to sell its Swiss business, The Phone House Switzerland, to Swisscom for an unstated sum.

In the FTSE 250, the falling oil price helped EasyJet bounce 5 per cent from yesterday's falls to 357.25p.

ArmorGroup, the provider of armed security guards in danger zones such as Iraq and Afghanistan, jumped 43 per cent to 77p after it agreed a takeover by Group 4 Securicor at 80p cash a share

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