George Soros was said to be the catalyst for heavy selling of FT-SE 100 futures. Rumours were rife that big US investors were going to follow his, as yet unconfirmed lead and go short on equities.
Trading in the FT-SE 100 contract was nearly twice the daily average at 23,000.
Equities, which started the session with steady gains, had a torrid time in afternoon dealings.
Gold shares, said to be favoured by Mr Soros, became the order of the day. Kinross Mines rose 17p to 694p, Freegold firmed 8p to 608p, Harmony added 6p to 261p, Welkom advanced 13p to 405p and Western Areas jumed 19p to 101p.
At the height of the futures selling the FT-SE 100 index was down 45.6 points. Only 14 of the index's constituents avoided the drop. And eight of those gainers escaped by only the narrowest of margins.
Most of the damage was caused as futures went to a discount of 10 points rather than the more usual 10 points premium to the cash market.
Dealings were heavy, although blue chip trading was low at 290 million while turnover in second liners topped 400 million. There were nearly 30,000 transactions.
Gilts also had a rough day, with longer-dated issues losing a full point as investors shied away from the pounds 3bn auction of 71 4 1998 stock.
Of the blue chips to gain Wellcome, up 12p to 735p, ICI, ahead 13p to pounds 12.47, and SmithKlein Beecham, up 7.5p to 468p, found favour among US investors.
Lasmo also shone, rising 3p to 148p on speculation that Total of France might use the rights issue to mount a bid.
BAT Industries continued to suffer, losing 13p to a 1993 low of 838p on worries about Philip Morris's aggressive price cuts on cigarettes.
The company, however, is not completely friendless. Yamaichi recommends buying the shares, believing they will strongly outperform the market as 'the potential of the tobacco and insurance operations is fulfilled'.
Euro Disney dropped another 42p to 853p, following the previous day's 38p hit, on second-quarter losses and concern about how it will fund phase two of the theme park's development.
Boots lost 7p to 462p on a reported Morgan Stanley downgrading and could soon come under further pressure.
Superdrug, owned by Kingfisher, has slashed the price of premium brand sun creams and lotions by up to 25 per cent in its 680 shops.
The move, analysts believe, is bound to hit Boots, which has 47 per cent of this highly profitable pounds 110m market and enjoys gross margins of about 50 per cent. Kingfisher shed 10p to 590p.
Taunton Cider, floated last year at 140p, climbed 11p to a fresh high of 213p after a round of analysts' presentations.
Forecasts for Taunton's 1992-93 results, due in July, were upgraded by about pounds 1m to between pounds 17m and pounds 17.5m. More than 3 million shares were traded.
Yesterday's results announcements were greeted with a mixed bag of sentiment. Cannon Street, despite thumping losses, rose 2.5p to 14p, while Brixton Estate slipped 8p to 177p on a worse-than-forecast drop in net asset values.
Brixton set the general tone for property shares. Among the main fallers were Bilton, off 6p to 514p, British Land, 4p softer at 249p, Great Portland, down 3p to 164p, and Land Securities, 5p lighter at 523p.
Micro Focus climbed 23p to pounds 20.48 as the Prudential sold a third of its stake, cutting its holding to 664,000 shares.
Mercury Asset Management has sold its 24 per cent stake in Jupiter Tyndall, the smaller rival to which it lost Leonard Licht, the fund manager recruited with a pounds 1m golden hello. Smith New Court placed the 8.3 million shares at 156p among 25 institutions. Mercury, off 3p to 455p, is believed to have paid an average 142p. Despite Mr Licht's transfer, Mercury says it has a good relationship with Jupiter, steady at 158p.
Haemocell dropped 4p to 186p as Philip Martin, a founding investor, sold 2 million shares at 178p through Henry Cooke, Lumsden. Shares were easily placed among exisiting and new UK institutions. Mr Martin is retiring and resigning his non-executive chairmanship. He has kept 300,000 shares. Analysts expect Haemocell, which yesterday announced a pounds 868,000 interim loss, to move into profit next year.
Shares of Mosaic Investments, suspended at 60p last September, are set to resume trading in the next week or so as the company completes a refinancing. Lloyds Bank has agreed new banking facilities and Rodney Day, who has been calling for redemption of his pounds 3m of preference shares, is expected to accept a deal giving him pounds 500,000 plus pounds 1m worth of shares now, plus pounds 1.5m payable over the rest of the decade.