FTSE tumbles to three-month closing low on energy worries
MINERS and energy stocks were the worst hit members of Britain’s sharply lower FTSE 100 index yesterday, hit by heightened fears of a slowdown in global growth.
The FTSE 100 ended down 98.61 points, or 1.7 per cent, at 5,674.38, its lowest close since 16 March when markets were plunging in the immediate aftermath of the Japanese earthquake.
Miners and integrated oil stocks lopped a hefty 49 points off the index after data showed China’s factory-sector growth was close to stalling in June.
Energy stocks were also hammered by a steep drop in the price of oil, with US crude off $4.34 at $91.07, after the International Energy Agency said it would release 60m barrels of oil from strategic government stockpiles in a bid to push down oil prices.
Glencore and ENRC were among the biggest losers, down 4.8 and 5.1 per cent respectively, while Vedanta tumbled 6.9 per cent.
Against this backdrop of plummeting oil prices, British Airways-owner International Airlines Group and cruise ship operator Carnival headed a short list of blue-chip risers, up 0.8 per cent and 0.7 per cent respectively.
Shares in the independent bank Numis were unchanged at 101p despite market talk of there being an offer on the table to settle a legal claim in relation to a private placing in 2007 in respect of Rock Well Petroleum.
Market sources suggested that Numis had made an offer of more than £20m to settle a claim being taken out against it led by the hedge fund CQS in the High Court. Numis declined to comment.
Investors were also forced to stomach weak data on the US labour market, with jobless claims rising more than expected — a day after Federal Reserve chairman Ben Bernanke gave a more downbeat outlook on the economy, lowering the forecast for US growth.
US blue chips were down 1.5 per cent by London’s close, while the Standard & Poor’s 500 Index shed 1.4 per cent, hovering dangerously near its 200-day moving average – a break below which traders said could be a bearish signal.
Europe’s debt crisis pressured banks, despite investor relief earlier in the week that the Greek government got the backing it needed in a key confidence vote.
“You would have thought that after the voting in Greece a couple of days ago you would have had more legs to the upside, but I think traders are still very nervy because Greece has basically just about got over one hurdle but has plenty more to come across,” said Manoj Ladwa, senior trader at ETX Capital.
“There seems to be very little in the way of conviction buying and I think that traders are using any rally in the markets as an excuse to close out of existing long positions or to go short.”
Among individual movers, energy supplier Centrica dropped 2.1 per cent after gains in the previous session inspired by vague bid rumours, after the firm said Britain’s first new nuclear plant, scheduled for early 2018, will be delayed.
BSkyB firmed 0.5 per cent after British regulator Ofcom delivered its report on News Corp’s proposed acquisition of the satellite broadcaster to the UK government, bringing the deal nearer to completion.