The investment bank downgraded TUI’s rating to neutral. Although JPMorgan believes the group can deliver its earnings growth target of “at least 10pc” by 2018, it warned adverse economic conditions in European could hurt the group’s prospects.

Meanwhile, Merlin Entertainments suffered its worst one-day drop ever on the lowered rating, as JPMorgan believes its valuation is “increasingly difficult to justify”. Even if Merlin were to accelerate the rollout of its seven new Midway sites or conduct further bolt-on mergers, the bank says the FTSE 100 stock is unlikely to be upgraded until 2017.

The Smiler ride at Alton Towers.

On Tuesday, Shore Capital also downgraded Merlin on valuation grounds. The share price has outperformed the market since the day before a serious rollercoaster crash at its Alton Towers theme park in June in which two young people lost legs, the broker said.

Martin Brown, of Shore Capital, said: “While we ultimately believe that trading at Alton Towers will recover, we expect that to occur in 2017 at the earliest recent reports that Alton Towers is going to be open for fewer days this year would suggest that management continue to believe the recovery will take time.” Shares in Merlin closed down 23.1p, or 5.4pc, to 406.7p.

Also in the leisure sector, Restaurant Group plunged to the bottom of the mid-cap index after it issued a pessimistic outlook for this year, following a slow festive season. Management blamed the weak Christmas trading period on lower retail footfall, the recent floods, and a more cautious macroeconomic outlook. Shares in the FTSE 250 group recorded its worst daily loss in eight years after they slid 116p, or 18.2pc, to 522p.

The weakness in the leisure sector and the persistent volatility in oil prices weighed heavily on Britain’s benchmark index. Despite heading towards three-year lows, the FTSE 100 eased back in late trading to end the day down just 42.74 points, or 0.72pc, at 5,918.23.

A late rally in oil helped mining and oil and gas stocks bounce back from recent lows. The price of a barrel of Brent crude steadied after tumbling to mutli-year lows earlier in the week. BP rose 3.5pc to 347.7p, while Royal Dutch Shell B shares made gains of 3.3pc to £13.90. On the mid-cap index, Vedanta Resources and Tullow Oil climbed 7.9pc and 7.7pc, respectively.

Chris Beauchamp, an IG analyst, said: “Oil prices are enjoying a rare pause in their downward slide, but it still looks to be only a matter of time before they continue their exploration of the $20 zone.”

Meanwhile, Anglo American leapt 13.6pc to 263p, while Glencore jumped 9.4pc to 78.6p and BHP Billiton advanced 6pc to 657p. BHP Billiton also benefited from a rating upgrade. Citigroup hiked its rating to “buy” after “the precipitous share price fall” and weakening iron ore and gas prices. “Risks still loom large from fallout of the Samarco disaster to volatile commodity prices, so we believe management should act boldly to stave off these risks by cutting the dividend and capital expenditure,” said Heath Jansen, a Citigroup analyst.

On the other side, Jordan-based drugmaker Hikma took a tumble – down 107p to £21.04 – after Jefferies slashed the stock’s price target amid concerns consensus US generics forecasts are too high.

Elsewhere, Tesco was among the top gainers following a better-than-expected Christmas trading update. Shares rose 6.1pc to 168p. Discount store chain BM and fashion retailer JD Sports also benefited from solid trading updates with shares rising 8.1pc and 4.2pc, respectively.

• Oil could crash to $10 a barrel, warn investment bank bears

Finally, read across from the US triggered a fall in Ashtead’s share price. On Wednesday, US rival United Rentals slumped to a 12 month low amid concerns over energy prices ahead of its fourth quarter results on January 27. Shares in Ashtead slipped 46p to 997p.