Carphone Warehouse fell 21p to 268p amid fears that Best Buy’s £1.1 billion cash injection would not be enough to fund the British company’s ambitions to buy Tiscali and take on BT in the broadband market.

Michael Williams, of Citigroup, maintained his “sell” advice with a 290p price target, saying that the Best Buy deal would not solve Carphone’s “deteriorating cash position”.

The group appeared to be struggling to convert sales income into cashflow, he said, as the costs of marketing and of signing up new customers in the fiercely competitive broadband market soar. Of the bidders for Tiscali, Carphone is the one that needs it most, so that TalkTalk can leapfrog BT to become the market leader.

The FTSE 100 fell 66.1 points to 6,204.7 as financial stocks slid after AIG, the world’s biggest insurer, unveiled a first-quarter loss of $7.81 billion (£4 billion) in the United States thanks to its exposure to mortgage assets. Royal & SunAlliance fell 4.5p to 139.4p while Aviva slipped 8p to 639p. Old Mutual fell another 4.2p to 120.6p after Thursday’s lacklustre results.

Whitbread rose 23p to £13.95 after Robert Tchenguiz, the property investor, revealed that he had bought a 3 per cent stake via contracts for difference. Mark Brumby, an analyst for Blue Oar, said: “The least that Mr Tchenguiz has done is to make an extremely shrewd and well-timed investment.”

Kazakhmys fell 128p to £17.86 on rebuffing a share-and-cash bid from Eurasian Natural Resources at £15.50, well below its current price. ENRC rose 19p to £13.07 amid speculation that Kazakhmys might bid for it.

Crude oil surged to a record high, even after Opec insisted that the market was well-supplied and driven by speculators. Yet only a few oil stocks benefited. Imperial Energy, whose oil assets are in Russia, was also bolstered by 29½p to 975p by hints from Vladimir Putin, the Russian Prime Minister, that he would cut oil taxes to encourage investment.

Fears of a dilutive equity issue by Assura, the operator of GP surgeries, made it the worst mid-sized casualty, down 6½p to 95p. Investec has predicted said recently that Assura would need to issue new shares before March next year.

Dairy Crest rose 23¼p to 472¾p before full-year results on May 20. Panmure Gordon said that recent falls caused by fears of rising raw material prices were baseless, since demand was soaring.

Aegis fell 3¼p to 129¾p after the head of its media division quit unexpectedly. Panmure Gordon speculated that this was to clear the way for a deal with Vincent Bolloré, the rebel shareholder, who is thought to want to merge part of the company with his Havas media group. WPP, down 8½p at 630p, wants to buy Synovate, its market research unit. Alex DeGroote, of Panmure Gordon, said: “Aegis could well be broken up over in the next 12 months.”

— New York: News that Citigroup was considering the sale of $500 billion of assets unsettled investors on Wall Street, who were jittery already after AIG reported its $7.8 billion loss. At the close the Dow Jones industrial average was down 120.90 points at 12,745.90.

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