The FTSE slumped to a three-month low at market close as traders digested the humanitarian disaster emerging from Japan’s earthquake and tsunami.
Risk appetite sank, with only non-nuclear energy firms boosted by the disaster, up as the threat of a nuclear explosion in one of Japan’s three damaged power stations remained high.
The FTSE 100 closed down 0.92 per cent at 5,775.24. It has lost almost 200 points in the past four trading days with sentiment weighed on by violence in Libya, eurozone debt worries, China and US trade deficits, and Japan.
“Sentiment in markets has been in reverse for the best part of a month now, and the ongoing tragedy in Japan is encouraging investors to remain in safe haven assets, which are not equities,” said IG Index sales trader Yusuf Heusen.
Markets and politicians alike focused on the contribution nuclear power was making to Japan’s crisis, with Germany and Switzerland among several countries putting their nuclear power ambitions on hold.
Temporary power supplier Aggreko topped the risers board, up 8.24 per cent at 1,523p and BG Group finished 3.7 per cent higher at 1,514p as traders bet they would benefit from higher demand in Japan while its nuclear power stations remained out of action.
Both stocks saw extremely heavy volumes traded, and in the FTSE 250, coal power station operator Drax Group saw its shares boosted 3.13 per cent to end at 408.7p.
Miners also rose with Vedanta and African Barrick Gold both closing higher, while investor Schroders’ non-voting shares finished 1.24 per cent up at 1,389p after Deutsche Bank analysts raised its rating to “buy”.
Fashion group Burberry fell furthest to close down 4.34 per cent at 1,123p on the back of investor worries that Japan’s appetite for high-end products would decline.
Large UK life insurers took a hit as the tsunami lowered sentiment on the sector – despite the fact that few have any exposure to losses in Japan. Aviva ended 3.06 per cent down at 440p and Standard Life gave up 2.55 per cent to finish at 217.5p, while Resolution was also down.
The smaller non-life insurers were also hit – on the FTSE 250, Catlin fell most to close down 3.17 per cent at 338.7p. But other Lloyd’s agents such as Amlin and Chaucer, which updated the market about their estimated exposure, fared better, closing up 2.23 per cent and 2.31 per cent respectively.
US markets also closed in the red after spending the day in the shadow of the earthquake, with stocks linked to nuclear power worst-hit.
General Electric, which has combined nuclear ventures with Hitachi, dropped 2.16 per cent to $19.92 and was the top percentage decliner on the Dow.
The Dow Jones industrial average was down 51.24 points, or 0.43 per cent, at 11,993.16. The S&P 500 Index was down 7.89 points, or 0.6 per cent, at 1,296.39.
The Nasdaq Composite Index was down 14.64 points, or 0.54 per cent, at 2,700.97.