The London market slumped to near four-year lows, as oil prices fell and Royal Dutch Shell said its earnings are expected to more than halve for 2015.

The FTSE 100 Index fell more than 3%, or 203.2 points, to 5673.6, after the price of Brent Crude fell below 27.50 US dollars, wiping £52 billion from top flight shares. It was the market's weakest level since November 2012.

Crude oil prices have fallen more than 70% since their peak of around 115 US dollars a barrel in summer 2014, as large Middle Eastern producers have kept up output in a bid to retain market share and heap pressure on US shale rivals.

The falls in London easily wiped out gains of just under 100 points on Thursday.

Germany's DAX and the Cac 40 in France were also around 3% lower. In New York the Dow Jones Industrial Average fell more than 2% in early trading.

The pound was up slightly against the US dollar at just under 1.42, after official data said unemployment fell to a near eight-year low in November of 1.6 million, although wages lifted at their slowest pace since February.

Sterling was also up slightly against the euro, at 1.30.

Oil giant Shell fell almost 7%, or 92p to 1277.5p, after it said it expects full-year underlying earnings to tumble to between 10.4 billion dollars (£7.3 billion) and 10.7 billion dollars (£7.6 billion), due to falling oil prices.

The update comes ahead of a shareholder vote next week on its 55 billion US dollar (£38 billion) deal to buy gas giant BG Group.

BP also fell 4% or 14.3p to 328.2p.

Elsewhere, pub group JD Wetherspoon fell 9% or 65.5p to 609p after it warned on profits for the second time in two months.

The group said it expected its operating margin for the half year to January 24 would be around 6.3% due to higher staff costs, or 1.1% lower.

Still in the FTSE 250, retailer WH Smith jumped almost 6%, or 92p to 1680p, after it said strong Christmas trading and the new craze for ''colour therapy'' helped it post its first high street sales rise in 14 years.

The magazines and stationery firm said like-for-like sales lifted 2% at its high street outlets in the five weeks to January 2, the first rise this part of business has seen since 2002.

It said sales were driven by strong seasonal stationery promotions and the demand for adult colouring books, a trend capturing the imagination of those looking to de-stress and spend time away from looking at mobile phones and screens.

The only two risers in the FTSE 100 Index were Randgold Resources up 148p at 4416p and Sports Direct International up 9.1p at 403.9p.

The biggest fallers in the FTSE 100 Index were Glencore down 7.8p at 71.2p, Anglo American down 17.8p at 221.1p, BHP Billiton down 46.2p at 580.9p and Royal Dutch Shell down 92p to 1277.5p.