THE London markets slumped after new figures suggested the UK is on the path to a recession.
Traders were unnerved after the latest IHS Markit/CIPS services purchasing managers' index delivered its worst ever reading, highlighting a dramatic slowdown for the services sector.
Economists said the figures, which came days after a major decline in manufacturing was revealed, point towards a steep contraction in the UK economy.
The FTSE 100 closed 64.72 points lower at 5,415.5 at the end of trading on Friday.
The pound was also weakened by the PMI figures, which were worse than analysts' expectations, bringing to an end the currency's recent rebound.
The value of the pound fell 1.2% versus the US dollar at 1.224 and was down 0.6% against the euro at 1.134.
Europe's largest markets also slumped as traders reacted badly to PMI figures which were largely worse than the UK's set of statistics.
David Madden, market analyst at CMC Markets UK, said: "The services PMI data from the major Eurozone economies were terrible, but the readings from Spain and Italy were particularly bad."
The German Dax decreased by 0.47%, while the French Cac moved 1.57% lower.
Global markets were also knocked by the latest set of disappointing US labour figures, although analysts said traders once again took the data in their stride.
Mr Madden added: "Sentiment was already weak before the US non-farm payrolls report was announced, and even though the update was dreadful, the markets had a relatively muted reaction to the numbers."
The Dow Jones slid lower at start of trading as fears over the economic impact of the lockdown were exacerbated by Friday's job figures.
UK supermarket stocks pushed higher as traders continued to bank on high demand for essential items and online deliveries.
Sainsbury's, which announced it was relaxing purchasing restrictions, saw the biggest increase of the grocers, rising 8.6p to 213.4p. Meanwhile, Morrisons rose 6.7p to 185.7p and Tesco rose 5.1p to 223.9p.
In company news, Stagecoach shares lifted after it said Megabus coach services in England and Wales will be suspended by Sunday.
The Perth-based transport group said services are "temporarily winding down" and will stop by the end of the week. It closed 3p higher at 69.35p.
Meanwhile, BAE Systems saw shares nudge upwards despite saying it expects "more significant disruptions" to business as it enters the second quarter of the financial year, after an opening three months where the coronavirus pandemic had little impact.
The company said it was continuing to assess the situation and would update shareholders on whether to expect a dividend in July when it releases half-year results. Shares rose 1.9p to 500p.
The price of oil surged again on the speculation there will be a large production cut in the near future, driven by reports that President Donald Trump is meeting leaders in the US oil industry.
The price of a barrel of Brent crude oil increased 11.69% to $33.06.
The biggest risers on the FTSE 100 were LSE, up 464p at 7,200p, Hikma, up 101p at 2,279p, Sainsbury's, up 8.6p at 213.4p, and Just Eat Takeaway, up 232p at 6,372p.
The biggest fallers of the day were L&G, down 17.85p at 159.7p, Rolls-Royce, down 26.7p at 251.6p, Pearson, down 47.2p at 477.8p, and Whitbread, down 237p at 2,471p.
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