The much-anticipated mega-merger between Carphone Warehouse and Dixons Retail was given the thumbs down by markets as both stocks turned sharply lower on the announcement.
It came as the FTSE 100 retreated from its recent move towards an all-time high, falling 37.6 points to 6840.9 amid nervousness over airline stocks and disappointing economic data from the US and Europe.
In New York, the Dow Jones Industrial Average was down sharply after figures showed America's industrial production fell in April.
There was little help from Europe, where it emerged that output from the 18 members of the euro failed to gain any momentum in the first quarter. Germany's Dax and France's Cac 40 both fell by 1%.
The latest disappointing GDP figures from the continent fuelled expectations that the European Central Bank will soon back fresh stimulus measures to shore up the recovery, causing sterling to rise a little against the single currency.
The pound was at 1.22 euros by the end of the session in London, and it also rose against the greenback, to reach 1.68 US dollars.
It recovered some of the dip suffered the day before when the Bank of England governor Mark Carney dampened expectations of an early rate rise.
In the top-flight, easyJet suffered a 7% fall after a broker note from RBC Capital warned that the World Cup posed a "stay at home risk" to the low-cost carrier over the crucial summer period.
Shares fell 7%, or 112p, to 1550p, while British Airways owner International Airlines Group also took a steep tumble, off 6% or 23.2p to 365.7p.
In the FTSE 250, Carphone Warehouse and Dixons were given short shrift by investors after unveiling details of their proposed tie-up, which will create a new company with a UK portfolio of more than 1,300 stores.
Both companies found themselves under heavy selling pressure as the merger of equals had been widely anticipated and raised fears over the challenge of combining the two operations.
Their combined value sank from £3.7 billion at the start of trading to £3.4 billion with Currys and PC World owner Dixons off 10%, or 5.2p, to 45.7p and Carphone Warehouse down 8%, or 26.5p to 301.3p.
Supermarkets did well in the FTSE 100 after Asda announced it had narrowly returned to sales growth. Morrisons climbed 8.9p to 205.2p while Tesco rose 6.2p to 302.6p and Sainsbury's climbed 5.1p to 332.8p.
Holidays firm Thomas Cook was the biggest faller in the second tier, even though it cut its first half losses in the first six months of the year.
The business, which like most travel firms and airlines traditionally makes a loss in the quieter winter months, beat expectations and narrowed losses to £257.1 million, from £268.8 million a year ago.
However its shares fell nearly 13%, or 22.5p to 156.1p after it revealed that the impact of Egypt's political turmoil on demand took £131 million off its half-year sales and £14 million from its profits.
The biggest FTSE 100 risers were Morrisons, up 8.9p to 205.2p, Fresnillo up 24p to 860.5p, Tesco up 6.2p to 302.6p and Diageo up 31.5p to 1909.5p.
The biggest fallers were easyJet, off 112p to 1550p, International Airlines Group down 23.2p to 365.7p, ITV down 9.5p to 169.6p and Barratt Developments down 19.2p to 357.8p.