Energy companies took a hammering in London today as a renewed investor focus on global economic fragility saw a flight to safety across Europe.
The FTSE 100 retreated more than 133 points or 2.3 per cent to close at 5,584.51, levels not seen since November 2010, after confidence in sovereign debt fell again and investors focused on the anaemic global recovery.
“Italian and Spanish yields have jumped in recent days, and for too many traders this looks like a replay of last year’s Greece and Ireland troubles,” said IG Index chief market strategist David Jones.
“With the US S&P 500 also on fresh lows for the year, it really is bounce or bust time for markets at the moment, but it is difficult to see what the positive news could be that pulls stock markets back from the brink.”
Commodities giant Glencore topped the fallers, down seven per cent at the close, while copper miner Kazakhmys also fell 4.2 per cent.
“Mining stocks are seeing selling pressure on the back of slightly weaker data out of China’s services sector overnight,” said CMC Markets analyst Michael Hewson.
Oil companies were also battered after Cairn Energy said that one of its wells in Greenland had come up dry.
Cairn closed down 5.1 per cent while fellow explorer Tullow Oil ended 5.7 per cent down and Shell was off 4.5 per cent.
Mining and energy giant BHP Billiton also closed 4.2 per cent lower.
SAB Miller closed 4.9 per cent lower after spending the day near the bottom of the FTSE, while UK life insurance giant Legal & General lost 4.7 per cent despite reporting rising profits and a 25 per cent dividend hike.
On the upside, precious metals miner Fresnillo was most sought after, closing 5.2 per cent higher, and platinum miner Lonmin rose 2.4 per cent, as investors anticipated soaring demand for safe haven assets.
Drinks can maker Rexam closed up four per cent after reporting a 35 per cent increase in its first-half profits.
Utilities were also preferred as investors ploughed into defensive stocks. United Utilities, Scottish & Southern Energy, National Grid and Centrica all gained at least one per cent.
Vodafone and Marks & Spencer were other bellwether UK firms to gain ground, rising one per cent and 1.1 per cent respectively.
“Marks and Spencer’s share price is one of the few retail gainers, after a positive comment from Arden Partners, and despite retail peer Next seeing H1 sales drop 1.7 per cent,” Hewson said.
US markets closed marginally higher after eight consecutive days of selling, buoyed by news from payrolls processer ADP that employers added more jobs in July than expected.
The Dow Jones industrial average ended up 0.25 per cent; the S&P 500 finished 0.5 per cent higher, while the Nasdaq Composite Index closed 0.89 per cent higher.