London's markets slid after it was confirmed that the capital will be shifted into tougher Tier 2 coronavirus restrictions, sending the FTSE 100 into a tailspin.

Trading in the UK's largest index made some ground later in the session, but only as multinational firms benefited from a slump in the value of the pound.

London's top flight closed 102.54 points lower at 5,832.52 at the end of trading on Thursday.

Connor Campbell, financial analyst at Spreadex, said: "The game changer this Thursday was the announcement that London is moving from Tier 1 to Tier 2, meaning different households are no longer allowed to mix indoors.

"And while many areas of the country were placed under similar, or harsher, measures earlier in the week, the London-centric nature of the markets, and the prominence the capital has in the UK economy, meant the change hit harder.

"It was lifted from its session lows by the pound's own painful performance, with the currency unravelling much of Wednesday's growth following Boris Johnson's claim he is "disappointed" in the progress of the Brexit deal negotiations."

Sterling had pushed higher on Wednesday after the UK indicated there would not be an abrupt end to Brexit talks, but concerns over a lack of major compromises hit the currency on Thursday.

The pound fell by 0.74% versus the US dollar at 1.291 and was down 0.34% against the euro at 1.104.

Europe's other major markets were also significantly lower as governments in France and Spain were also alarmed by rising virus case numbers.

The German Dax decreased by 2.49%, while the French Cac moved 2.11% lower.

Across the Atlantic, the Dow Jones also slipped into the red although its decline was not as stark, as talks between Democrats and Republicans continued over a stimulus package.

UK hospitality, housing, travel and commodity stocks were generally lower at the end of the session.

In company news, pub group Marston's closed lower after it said around 2,150 of its pub workers currently on furlough support are set to face redundancy following the impact of the virus.

Marston's put the blame squarely on the recent nationwide measures to tackle the surge in coronavirus cases, which has seen curfews placed on hospitality venues and the closures of sites not serving food in high-risk areas.

Shares in the company were 0.64p lower at 44.2p at the close of play.

Elsewhere, online electricals retailer AO World shot to the top of the FTSE 350 after it posted surging sales as shoppers moved online in recent months.

It closed 71p higher at 302.5p.

Hostelworld shares plunged 9.6p to 44.5p after warning its bookings are set to slump by up to 22% this year and it sees no sign of the global travel market improving in the short-term.

The price of oil drifted lower as prices were weighed down by the broad slump in sentiment which drove concerns over demand.

The price of a barrel of Brent crude oil decreased by 0.4% to $42.44.

The biggest risers on the FTSE 100 were Rolls-Royce, up 15.1p at 195.1p; Just Eat Takeaway, up 194p at 9,598p; Standard Chartered, up 5.7p at 360.5p; and HSBC, up 2.65p at 299.25p.

The biggest fallers of the day were Mondi, down 76.5p at 1,591p; Pearson, down 24.6p at 540p; Burberry, down 67p at 1,487.5p; and Prudential, down 41.5p at 1,078.5p.