(Close): London's leading shares slid into negative territory on Monday afternoon, having shown signs of a recovery in the morning.
The FTSE 100 closed down 117.91 points at 6,182.72, after the price of Brent crude oil dipped again to $61.35 a barrel, having earlier risen to $63.
Last week, the index suffered its worst week since August 2011, falling 6.3% on oil-related concerns.
Oil and mining stocks fell, with BP closing 3.2% lower.
Oil prices followed an uncertain course throughout the day.
Initially they dropped after the head of Opec reiterated at the weekend that the oil cartel would not try to shore up plunging oil prices by reducing production.
But the price recovered later, with some analysts citing the news that two of Libya's main oil terminals have been closed following clashes between troops. , before diving again subsequently.
Shares in Carpetright jumped more than 14% after the floor coverings retailer reported a rise in half-year profits and said it expected full-year profits to be at the upper end of forecasts.
Half-year underlying profits more than doubled to £6.7m, with like-for-like UK revenues up by 6.5%.
Greggs shares rose 5.5% after the company said it expected full-year profits to beat expectations.
The retailer said it had benefited from a "favourable trading environment" with the weather "generally helpful".
Greggs said sales at stores open for more than a year were up 5.2% in the 24 weeks to 13 December.
On the currency markets, the pound fell 0.4% against the dollar to $1.5654 and slipped 0.4% against the euro to €1.2560.
