The UK’s blue-chip index plunged on opening as Donald Trump’s victory in the US presidential election spooked markets, before paring back losses.
London’s FTSE 100 Index dropped as much as 2% or 146.8 points to 6696.3 as investors abandoned riskier trades including global stocks.
It later narrowed losses to stand 27.3 points lower at 6815.8.
Sterling pushed 0.3% higher on the back of dollar weakness to around 1.24, as investors abandoned the US currency for safe-haven assets like gold which rose more than 2.5% to around 1305.07 US dollars per ounce.
However, analysts suggested that market reaction could have been much worse.
Connor Campbell, a financial analyst at SpreadEx said: At the moment the losses aren’t quite as big as there were in Asia overnight; the FTSE is down just shy of 2%, with the DAX and CAC falling 2.8% and 2.5% respectively. Yet there is surely more to come, especially with a US open that could see well see the Dow Jones post its biggest ever single session slump.“
