Standard Chartered plunged to the bottom of the blue-chip index after Investec was forced to backtrack onFriday's rating upgrade.

While investors worldwide dumped banking stocks last week amid concerns about the health of the sector, Investec made the bold move to upgrade the Asian-focused bank, due to its valuation.

However, two trading sessions later, the broker reversed its decision to upgrade, downgrading the stock to “hold”, after it rallied “hard”, by more than 17pc since Thursday.

“We are now forced, somewhat hastily, to recommend that investors take profits or cut losses,” said Ian Gordon, of Investec.

While Mr Gordon admits “not much has changed” since Friday, a weak earnings outlook has constrained the broker’s enthusiasm.

Although Investec believes Standard Chartered’s capital position will “prove adequate”, it remains concerned about revenues. The broker has already forecast a 14pc slump in revenues for this year.

The outlook for impairments also remains “highly uncertain”, Mr Gordon added, with persistent oil- price volatility driving “sudden short-term moves in sentiment”.

Separately, in another bearish note, Morgan Stanley cautioned investors: “Asset quality outlook for Asian banks has worsened since Standard Chartered’s strategic review,” due to slowing economies, lower commodity and property prices.

The UK-listed bank closed down 24.2p – or 5.3pc – at 428.9p. Its peers enjoyed gains, with Royal Bank of Scotland 1.5pc higher at 250p, Lloyds up 1.2pc to 60.6p and HSBC 0.4pc better at 448.2p.

Barclays also climbed 0.4pc to 161.5p after Investec reaffirmed its “buy” rating, as it expects the FTSE 100 stock to deliver “a very healthy rebound” in the next 12 months.

Away from the banking sector, it was another wildly volatile trading session across Europe, after Russian and Saudi Arabia oil ministers failed to reach an agreement to cut production. Instead, the top oil exporters agreed to freeze oil production at January levels.

However, with the deal contingent on other producers joining in and Iran absent from yesterday’s meeting in Doha, oil prices slumped, following a brief morning rally amid false hopes of a production cut.

The resumption in the oil price slide weighed on European stock markets, with Frankfurt’s DAX closing down 0.8pc and the CAC in Paris losing 0.1pc.

Alastair McCaig, an IG analyst, said: “Considering the Saudi oil minister was not the driving force behind today’s meeting it should not come as too much of a surprise that results have underwhelmed expectations.”

Oil majors eased off intraday highs. Royal Dutch Shell B shares edged 1.6pc higher to £15.65, while BP added 1.4pc to 337.4p. On the mid-cap index, the 3.7pc fall in Brent prompted Tullow Oil and Amec Foster Wheeler to falter – down 2.9pc and 7pc, respectively.

Meanwhile, the latest fall in oil lifted British Airways owner IAG rose 2.8pc to 508.7p and low-cost carrier easyJet advanced 2pc to £15.38.

Back in London, the FTSE 100 partly surrendered gains of 1pc made in early trade, to finish the day up 37.89 points – or 0.65pc – at 5,862.17.