Lowest FTSE close in ten months as US manufacturing lull fuels double dip fears
BRITAIN’S top shares hit a 10-month closing low yesterday as downbeat data from the US, China and Britain sparked double-dip recession fears, triggering a broad sell-off, with banks and miners the hardest hit.
The FTSE 100 fell 111.12 points, or 2.3 per cent, to 4,805.75 – its lowest close since 3 September 2009.
Markets were spooked after a key survey of US manufacturing activity fell to its lowest in six months, while contracts for pending sales of previously owned homes plunged a record 30 per cent in May, far more than expected.
The US figures followed data from China showing manufacturing growth slowed in June. In Britain, a rebound in manufacturing slowed from a 15-year high in June as export order growth all but ran out of steam.
Commodity-linked assets were among the hardest hit as base metals and crude prices fell across the board as fears of demand drying up rippled through the market.
Miners Randgold and Eurasian Natural Resources were among the worst off, down 5.4 per cent and 5 per cent respectively.
Worries over the stability of the recovery overtook reports in the Sydney Morning Herald which said key mining companies have agreed a compromise on a mining “super tax”.
The blue-chip index lost more than 13 per cent in the second-quarter, the worst fall since the third-quarter of 2002 when the dotcom boom collapsed, but index compilers FTSE Group said BP accounted for almost a third of this.
BP was one of the only two risers on the FTSE 100 yesterday, gaining 2.8 per cent with traders citing talk that the oil giant had capped the leaking well in the Gulf of Mexico. Royal Dutch Shell fell 4.5 per cent