UK shares fell yesterday, testing a two-month low but failing to break a main support level as growth fears in Europe led stocks that are vulnerable to a downturn in economic activity lower.
The FTSE 100 index was down 1.1 per cent at 5,722.01 points at the close, having gained 0.3 per cent in the previous session after a late rally when the US market opened.
Although US stocks opened higher again, it was not enough to lift UK shares as investors focused squarely on Europe.
“The rally late in the day yesterday was only to do with the US rallying. We started off better today on Cisco’s numbers but that was not good enough to hold it,” said Andy Ash, head of sales at Monument Securities.
“There’s a lack of good news, and I think people’s attention is focusing on Europe, whereas previously they’d been concentrating on the fiscal cliff and the US election, and they’re suddenly realising nothing has been sorted out here at all. I think it is Europe which is beginning to rattle people again.”
The energy and materials sectors combined to knock more than 30 points off the FTSE 100.
Evraz was the biggest faller, losing seven per cent, followed by another resources company, Eurasian, which lost 5.1 per cent.
Eurasian is the worst performing FTSE 100 stock this year, down around 57 per cent, Thomson Reuters data showed, with its latest results pointing to pressure from weaker markets and rising costs.