Hedge fund Man Group has ended the day almost 25 per cent, the biggest one-day plunge in its share price since November 2008, after shocking the markets with the scale of asset outflows over the past three months.
UK stocks closed lower as confidence bled out of the market in the last hours of the session, weighed down by the big picture of unresolved world economic issues.
The FTSE 100 ended the day 1.4 per cent lower at 5,217.6 despite climbing throughout the morning.
But Man Group’s drop, after it said poor fund performance had cut $7bn (£4.5bn) from its assets under management since June, led the fallers on the FTSE 100 and vastly outpaced the next-biggest faller, Cairn Energy.
Independent energy explorer Cairn slumped 6.5 per cent after it plugged and abandoned a well offshore Greenland that had come up dry. The setback is its sixth unsuccessful drill in the country.
Mining companies suffered as risk appetite evaporated, leaving Antofagasta down 5.9 per cent, Fresnillo off by 5.7 per cent and Rio Tinto 4.4 per cent lower.
Commodities producer and trader Glencore also fell 4.9 per cent.
Motor insurer Admiral also lost 4.6 per cent as investor fears over the sustainability of its growth and profits as regulators clamp down on the sector have mounted.
The banking sector also continued to fall. “There has been a focus on financials, which are much weaker,” said IG Index sales trader Will Hedden.
“Barclays (-2 per cent), have the unfortunate honour of leading the FSA’s complaints league for the first half of the year, and Lloyds (-2.8 per cent) branch sell-off has got one step closer as new venture, NBNK are in the running to buy 630 off them for around £1.5bn.”
On the FTSE 100 upside, energy group BG gained 3.4 per cent despite the market slide after broker Goldman Sachs added to its conviction buy list. Its peer Scottish and Southern Energy gained 0.4 per cent.
Defensive stocks such as utilities and outsourcing companies also gained about 0.5 per cent or less.
Technology firm Smiths Group ended the session up 2.2 per cent after healthy full-year results and despite its decision to cut costs in anticipation of lower government defence spending in future.
US markets opened higher but the Standard & Poor’s has now sunk to about 0.5 per cent lower, while the Dow is off by 0.5 per cent.