The FTSE 100 Index saw its steepest one-day fall in five months today as the prospect of higher US interest rates and the latest drop in oil prices combined to send stocks tumbling.
London’s top-flight saw £44billion wiped off its value as it fell 2.5%, or 173.6 points, to 6,702.8 – the heaviest percentage fall since October 15.
Germany’s Dax and France’s Cac 40 were also down, as was New York’s Dow Jones Industrial Average, but it was the FTSE 100 that suffered the steepest plunge.
Markets have been spooked by the possibility of higher US interest rates ever since figures emerged on Friday showing strong employment growth.
There also remains uncertainty over Greece, which needs to convince European finance ministers in Brussels that the country’s economic reform plans are sufficient to merit the latest tranche of bail-out cash.
With the European Central Bank this week launching its £790billion stimulus programme with the purchase of government bonds, the euro has continued to weaken.
The pound set a new seven year high against the single currency after passing the 1.40 barrier for the first time since late 2007 – and later headed close to 1.41. But it was down against the US dollar at just under 1.51.
Latest fluctuations in the energy market had a major bearing on London’s performance as Brent crude’s sharp fall to below $57 a barrel depressed shares in BG Group and Tullow Oil – both off 7%.
Royal Dutch Shell was lower by nearly 5%, or 103.5p at 2037.5p after UBS removed its buy rating on the oil giant. BP fell 17.6p to 428.1p.
The Footsie’s biggest fallers included BG Group down 68p to 851.2p, Tullow Oil off 24.3p at 321.8p, Antofagasta down 41.5p to £7.11 and Anglo American off 56.5p at 1081.5p.
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