The FTSE 100 index tumbled 184.9 points to 6191.6 as stock markets on both sides of the Atlantic reeled from a US report which triggered concerns about the impact of higher-than-expected prices on consumer spending.

Fears intensified as US crude prices hit fresh highs close to $130 a barrel.

UK mining giants BHP Billiton and Rio Tinto saw about 7 per cent wiped off their market value as leading broker Morgan Stanley warned mining company shares were due a correction of up to 20 per cent.

Rising inflation has not only stoked fears about its damage to consumer spending, it also dramatically cuts the prospect of central banks slashing interest rates to boost economic growth.

“Equities have certainly had a good run of late but, under the current market conditions, a correction was always looking imminent,” said Jimmy Yates, a dealer at CMC Markets.

“But it may be premature to call an end to this correction — some may be eyeing a 6000 level for the Footsie.”

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