London was among European markets to fall back amid concerns over soaring energy prices, as the price of oil leapt to a new three-year high.

Buoyant energy stocks helped the FTSE 100 perform slightly better than European peers, although technology firms seemed particularly weak during the session.

The FTSE 100 closed 35.3 points, or 0.5%, lower at 7,028.1 on Tuesday.

Michael Hewson, chief market analyst at CMC Markets UK, said: "European markets have slipped back sharply today, with all sectors lower, except for energy, which is being buoyed by the surge in energy prices, as oil prices nudge above 80 dollars a barrel and natural gas prices in Europe hit new record highs.

"The rise in energy prices isn't just affecting Europe and the US, with China having to impose power cuts to preserve inventory levels.

"Having been told for months that inflation is transitory, it is becoming increasingly apparent that the rise in energy prices, along with associated supply chain problems, is acting as a headwind to growth and will likely prompt a sharp slowdown in economic activity."

The likes of Royal Dutch Shell and BP were therefore strong performers in London, following up on a similar bounce in share value from Monday.

Brent crude increased to $80.75 per barrel before easing back to $78.8.

Elsewhere in Europe, the other key markets suffered large slumps as they were also impacted by uncertainty over the next German government.

The German Dax decreased by 2.09% and the French Cac moved 2.17% lower.

Meanwhile, sterling dropped despite increasingly hawkish noises from inside the Bank of England, hitting its lowest level against the dollar since January.

The pound was down 0.04% versus the US dollar at 1.352 and was 0.06% lower against the euro at 1.156.

In company news, Go-Ahead Group shares plunged by almost a quarter after Southeastern, the regional rail firm majority-owned by the listed transport firm, was stripped of its franchise after failing to declare more than £25 million of taxpayer funding.

Elodie Brian, the chief financial officer of transport firm Go-Ahead, resigned.

Shareholders were shaken by the announcement, with Go-Ahead falling by 255.5p to 769.5p.

Smiths Group topped the FTSE 100 after the engineer surpassed market expectations and raised its dividend for the past year.

Shares finished 47.5p higher at 1,411.5p after it posted revenue of £2.41 billion for the year to July 31 and moved closer to the sale of its medical unit.

Elsewhere, Irn-Bru maker AG Barr dipped after it said it was grappling with "challenges" in its supply chain, which it said are likely to reduce its profit margins in the second half of the year.

The Scottish drinks firm was down 18p at 521p on Tuesday evening.

The biggest risers on the FTSE 100 were Smiths, up 47.5p at 1,411.5p, Royal Dutch Shell A, up 44.2p at 1,641.8p, Glencore, up 7.7p at 344.25p, and Royal Dutch Shell B, up 36p at 1,631p.

The biggest fallers of the day were Aveva, down 222p at 3,647p, Sage Group, down 33p at 707.8p, Taylor Wimpey, down 6.85p at 158.7p, and Intermediate Capital Group, down 86p at 2,026p.