Business

London slumps to four-year low as China crashes

AN office worker views a graph showing yesterday's movement in the FTSE 100 Index, as it fell by as much as 190 points to dip below the 6,000-mark for the first time in more than two and a half years PICTURE: Lauren Hurley/PA
AN office worker views a graph showing yesterday's movement in the FTSE 100 Index, as it fell by as much as 190 points to dip below the 6,000-mark for the first time in more than two and a half years PICTURE: Lauren Hurley/PA AN office worker views a graph showing yesterday's movement in the FTSE 100 Index, as it fell by as much as 190 points to dip below the 6,000-mark for the first time in more than two and a half years PICTURE: Lauren Hurley/PA

THE London market slumped to its sharpest fall in four years yesterday as shares were routed by growing fears over the Chinese economy pushing the top-flight to its lowest level since December 2012.

The FTSE 100 Index dipped below the 6,000-mark, closing down 289 points at 5898.9, adding to the gloom seen last Friday when it fell nearly 3 per cent.

Yesterday's drop of 4.7 per cent matched the biggest one-day market slide since September 2011.

The market fell for its tenth session in a row – the worst losing streak since it finished lower for 11 days in succession in 2003.

There were also falls of more than 4 per cent on Germany's Dax and France's Cac 40.

Markets have been plunged into economic uncertainty over slowing growth in China, the world's second biggest economy, and the depreciation of the yuan.

The latest session saw the main index in Shanghai dive by a further 8.5 per cent, deepening its recent heavy slump and meaning it has lost all its gains for 2015 – despite attempts by Beijing to stem the declines.

Jasper Lawler, market analyst at CMC Markets, said the interventions had proved counter-productive, sparking panic among retail investors.

Investors around the world were spooked after China's central bank "spectacularly failed" to stimulate the economy, in a world where huge stimulus efforts are underpinning recovery efforts in Europe and the US, he added.

On currency markets, the pound was down by two cents against the euro at slightly below 1.36, as traders bet that woes in China made the chances of a UK rate hike less likely. Sterling was little changed against the US dollar at just over 1.57.

In equities, trading screens turned red with almost all of the UK's top 100 listed stocks falling.

Worst hit were companies in the commodities sector, where prices have been severely hit by fears over China.

BHP Billiton fell 9 per cent, or 98p at 967.5p while Glencore dropped 13 per cent, 20.7p to 137.9p and Anglo American slipped 10 per cent, or 72.6p at 660.2p.

Asia-focused bank Standard Chartered was down 35p at 745p.

Oil was also hit, with the price of a barrel of Brent crude hitting a new six and a half year low close to US$43. BP fell 26.2p at 331.1p and Royal Dutch Shell slipped 106.5p to 1586p.

The only riser was More Than insurer RSA, on reports that Zurich Insurance wanted to extend the timetable to make a formal £5 billion offer for the company. Shares added 3.7p to 495p.

Meanwhile, telecoms giant BT was in focus after snatching rights to screen the next Ashes series after a reported £80 million five-year deal to screen Australian cricket.

Shares fell 5 per cent, or 21.5p, to 414.2p. Rival Sky fell 3 per cent, or 31p, to 1010p.

The only riser on the FTSE 100 Index was RSA Insurance up 3.7p at 495p.

The biggest fallers in the FTSE 100 Index were Glencore down 20.7p at 137.9p, Anglo American down 72.6p at 660.2p, BHP Billiton down 98p at 967.5p and BP down 26.2p at 331.1p.