The FTSE 100 slipped into the red yesterday as the UK's inflation rate hit another 40-year high in September.

London's top index lost gains made earlier in the week as enthusiasm waned in the aftermath of Chancellor Jeremy Hunt's fiscal policy U-turns, pushing the FTSE 100 11.75 points lower, down 0.17 per cent, to 6,924.99.

The UK's Consumer Prices Index for September came in above expectations at 10.1%, driven up by surging food prices. London's top index was also hampered by sliding shares in the UK's biggest banks following reports that Mr Hunt is weighing up a decision whether to slap higher taxes on lenders' profits.

Shares in FTSE 100-listed banking giants Lloyds Banking Group, Natwest and Barclays were all down on Wednesday as investors reacted to the speculation.

"UK banking shares have struggled the most today on fears that they could be hit by a new windfall tax, on top of the 8% banking surcharge they pay, on top of the corporation tax rate," said Michael Hewson, chief analyst at CMC Markets.

"With that due to rise to 25% next year, it seems there is no length that politicians will stoop to try and fill various holes in the public finances. Never mind that they risk crushing investment in the process."

The pound also slipped from its gains earlier in the week. It was down 0.75% at 1.1236 US dollars when markets closed, and was just fractionally up by 0.02% against the euro at 1.1484 euros.

The more downbeat sentiment was reflected across European and US markets as well. The German Dax closed 0.19% lower and the French Cac was down 0.43%.

In the US, the S&P 500 was down 0.29% and Dow Jones edged up by 0.03% when European markets closed.

It was a tumultuous day for online fashion retailer Asos, which said it needs to write off up to £130 million of stock amid a slump in consumer spending. It made a pre-tax loss of £31.9 million in the year to August 31, a sharp drop from the £177m profit of a year ago.

Nevertheless, investors were placated by the group's plans for a turnaround and its shares rose by 12.2%.

On the other hand, Just Eat Takeaway.com cheered an early return to underlying profit after embarking on a "path to profitability" earlier in the year. It achieved underlying earnings in the third quarter despite an 11% decline in the number of takeaway orders, pushing its shares 2% higher.

The biggest risers on the FTSE 100 were BP, up 10p to 455.25p, International Consolidated Airlines Group, up 2.24p to 118.1p, Pershing Square Holdings, up 50p to 2,720p, HSBC Holdings, up 8.25p to 474p, and Vodafone Group, up 1.55p to 101.16p.

The biggest fallers were Kingfisher, down 12.7p to 203p, Segro, down 35.2p to 715.4p, Lloyds Banking Group, down 2p to 40.61p, Hargreaves Lansdown, down 33.8p to 765.2p, Rightmove, down 20.3p to 460.2p, and Dechra Pharmaceuticals, down 106p to 2,608p.