By Alistair Smout and Francesco Canepa
LONDON (Reuters) - Britain's top share index fell sharply on Thursday, led by tech stocks as investors grew nervous about their declining growth prospects and rich valuations.
Britain's FTSE 100 closed 1.4 percent lower at 6,895.33 points, bringing the drop since a record high hit on Tuesday to 2.4 percent.
Analysts at Citigroup (NYSE:C) on Thursday cut their forecasts for the smartphone sector and target prices on stocks highly exposed to China, the world's largest phone market, including Britain's ARM, which designs computer and smartphone chips.
The stock closed down 4.2 percent at 1,080 pence, extending the previous session's fall in substantial volumes. The broader FTSE 350 tech hardware index was down 3.7 percent.
"I've still got my 'shorts' in place on ARM. I'm waiting to see if it can go down further to test the 10 pound level," said Beaufort Securities sales trader Basil Petrides.
Airlines also saw substantial selling as Brent crude shot up nearly 6 percent after Saudi Arabia and its Gulf Arab allies began a military operation in Yemen.
Airline IAG (LONDON:ICAG) fell 3.4 percent and budget airline easyJet dropped 2.8 percent despite upgrading first-half forecasts. Easyjet warned that if current exchange rates stuck, they would have an adverse impact over the year.
London Stock Exchange group was the biggest FTSE 100 faller in percentage terms, down 5.6 percent at 2,310 pence after Borse Dubai sold its 17.4 percent stake.
A familiar with the matter said the sale went through at 2,250 pence per share.