UK and European equities shuddered to their lowest levels since 2005 on Friday, a bleak end to a torrid week, as record oil prices fuelled inflation fears and sent investors fleeing to safety.

With US markets closed for the Independence Day holiday, shares in Asia and Europe felt the brunt of the selling. The FTSE 100 fell 1.2 per cent to close beneath the lows seen as Bear Stearns imploded in mid-March, bringing its losses over the week to 2.1 per cent. The pan-European FTSE Eurofirst fell 1.3 per cent.