FTSE ends deep in the red
Global stock markets plunged into the red today after downbeat economic forecasts in the US and UK sent shares reeling.
The FTSE 100 Index closed 131.2 points lower at 5245.2 – a 2.4% fall – as the Dow Jones Industrial Average also tumbled soon after opening.
Investors grew concerned over the world’s biggest economy after the Federal Reserve downgraded its outlook and began using proceeds from mortgage bonds in an effort to keep borrowing costs low.
Asian markets had earlier finished in the red after new figures showed China’s industrial growth slowed further in July.
Bank of England Governor Mervyn King added to uncertainty by downgrading growth forecasts and warning the UK faced “a choppy recovery”.
The pound weakened against the US dollar as analysts said the Bank’s latest inflation report suggested interest rates were unlikely to rise any time soon.
Sterling slumped nearly 1% to 1.57 dollars.
Miners and banking stocks bore the brunt of the sell-off, with Lloyds Banking Group off 5.1p to 70p and Kazakhmys 73p lower at 1168p.
A shortened risers board featured a number of defensive stocks as investors dived for cover amid the economic uncertainty. The risers included Smiths Group, which climbed for a second session amid speculation that the airport security scanners and medical devices firm could be in line for a break-up.
Shares jumped 4% or 45p to 1193p.
The session saw more turbulence for holiday companies after Thomas Cook said profits will be at the lower end of market hopes.
Shares fell 3.7p to 180.2p in the FTSE 250 Index while Thomson owner TUI Travel dropped another 13.1p to 190p after issuing a similar warning yesterday.
Elsewhere, Standard Life shares were lower despite a 10% rise in half-year operating profits and 4.8% increase in its half-year dividend. The figures were in line with expectations, but analysts said the pay-out to shareholders came in short of estimates, prompting shares to fall 7.8p to 208.6p.
Prudential, which is due to round off a decent results season for the sector with a rise in its half-year dividend tomorrow, fell 20.5p to 562p.
The only Footsie risers were Smiths Group up 45p to 1193p, Randgold Resources ahead 25p to 5465p, Serco Group up 0.5p to 543.5p and Imperial Tobacco Group ahead 1p to 1806p.
The biggest Footsie fallers were Lloyds Banking Group down 5.1p to 70p, TUI Travel off 13.1p to 190p, Barclays down 20.1p to 313.6p and Kazakhmys down 73p to 1168p.
