FTSE down 11 per cent from peak in May

The FTSE 100 closed down 1.4 per cent to 6,029.10 today, following five consecutive weeks of losses and down more than 11 per cent from a 13 year peak in May 2013, approaching the psychologically significant mark of 6,000.

Although concerns about the US Federal Reserve QE tapering plans still weighed heavy, troubles in China also evidenced themselves in the mining sector. Goldman Sachs this morning cut its forecast for Chinese growth by 0.4 percentage points to 7.4, citing soft cyclical signals and a recent tightening of financial conditions, hitting miners particularly hard.

Action Forex note an increasing correlation of the FTSE with gold prices (70 per cent over the last two weeks):

Major European equities indices also dropped, with the German DAX down 1.3 percentage points, the French CAC down 1.6 percentage points, and the Italian MIB down 0.5 percentage points. Spain’s IBEX was down as much as 2.2 per cent and approaching the lows of late 2012.