London Market Report
- Published
(Close): Drugs shares pulled the market down sharply after new US tax rules were seen as making several UK firms less desirable for takeovers.
The US has reduced the benefits to companies who strike what are known as "tax inversion" deals.
Shares in Shire sank 2.5% on fears the changes could threaten its agreement to be bought by AbbVie.
AstraZeneca - which was a takeover target for Pfizer earlier this year - dropped 3.57%.
The FTSE 100 index closed down 97.55 points, or 1.44%, at 6676.08.
There was further misery for Tesco, a day after its shares plunged 11% on news it had overstated profits guidance by £250m.
Its shares fell a further 4.2% to 194.5p, despite it announcing that its new chief financial officer, Alan Stewart, was joining the company immediately, more than two months earlier than originally planned.
Sugar company Tate & Lyle fell 16.7%, after the company warned that profits would be dented by significant disruption to its supply chain.
On the currency markets, the pound rose 0.05% against the dollar to $1.6369 and fell 0.04% against the euro to 1.2728 euros.