The FTSE100 was down at the close 34.3 points at 5,620.9 with the FTSE250 down 43.5 points at 8,981.2 and the FTSE Smallcaps down 18.7 points at 3,346.6.

Volume was poor with only 2.27 billion shares changing hands in 309,051 deals.


Wall Street extended recent falls as persistent inflation fears prompted nervous investors to keep selling following hefty losses last week, the worst so far in 2006.


At 4:30pm BST the DJIA was down 1.60 points at 10,890.


Today’s look at individual Stocks:


M&A related stories are back with us once again, with Smith & Nephew up 2.5p at 436.5p. The company extended Friday's strong performance as bid rumours escalated. On Saturday, the Financial Times market report highlighted the fact that US firm Bristol Myers Squibb is considering a bid for the company, while the Independent on the same day noted rumours that US group Johnson & Johnson is preparing a 500p a share offer for Smith & Nephew.


GUS was also boosted by bid talk today, climbing 5p at 918p, after weekend press reports suggested that US private equity groups were considering bids of more than £10 billion for the retail and business services group.


The oil sector, meanwhile, is back in the news once again as things start to ‘hot up’ with Iran. The price of crude futures is now heading towards the $72 a barrel mark after the second US aircraft carrier moves into the gulf.


BP however closed down 4.5p at 607.5p and Shell also closed down 7p to 1,782p.


The report on Tullow Oil shall be posted on Wednesday’s blog.


The Vodafone Group closed down 3p to 117.5p after The Sunday Telegraph reported that Hermes is one of the leading members of a group of institutional investors pushing for the mobile firm to enforce boardroom changes.


Also on the M&A front, Associated British Ports gained 4p to 779p on reports that a consortium led by Goldman Sachs is finalising a £2.5 billion offer for the UK port operator.