Further signs of recovery in the US failed to distract investors from gloomy manufacturing figures in China and the eurozone today as London’s leading shares index closed in the red.
The FTSE 100 Index was 46.3 points lower at 5845.7, a fall of nearly 1%, after purchasing managers’ surveys in both China and the eurozone came in below expectations.
World markets were lower despite figures showing the number of unemployment benefit seekers in the US fell 5,000 to a four-year low last week, the latest in a series of positive signs for the world’s largest economy economy.
The data from China, which showed a decline in factory activity for the fifth month in a row, added to recent evidence that the Asian powerhouse economy was coming off the boil.
The resource-hungry country has recently cut its growth forecasts, while a senior mining executive warned demand for iron ore has been flattening out.
Meanwhile, the eurozone economy contracted at a faster rate in March, serving as a reminder that the problems underlying the debt crisis were far from solved.
The pound dropped to 1.58 against the US dollar, a traditional safe-haven investment, while sterling also dipped against the euro to 1.19.
Meanwhile the price of oil retreated amid fears over the impact that China’s prospects would have on the global economy, with benchmark crude, which has been elevated in recent weeks by concerns over escalated political tensions in Iran, fell more than 2% to 105 US dollars a barrel.
The FTSE’s heavily weighted mining stocks were battered by the renewed fears over a global recession, with Fresnillo slipping 116p to 1621p, Vedanta Resources dropping 65p to 1287p and commodities trader Glencore losing 12.3p at 403.5p.
Randgold Resources was the biggest faller in London’s top flight as details emerged of a coup in Mali, where the gold miner has two big facilities.
Shares dived more than 13% amid reports that the military has seized control in the West African country and President Toure has fled his palace. The stock was off 830p at 5765p.
There was a mixed session for retailers after the Office for National Statistics revealed a larger-than-expected 0.8% decline in sales volumes in February and downwardly revised growth for January.
Next, which earlier reported a 5% rise in profits to a slightly better than expected £570m and was cautious on prospects for the rest of the year, saw shares slide 1p lower at 2914p. Elsewhere, Marks & Spencer dropped 2% or 6.5p to 383p.
But B&Q owner Kingfisher, which revealed a 20% rise in full-year profits and highlighted the progress of its four-year turnaround programme, climbed to near the top of the risers’ board.
Chief executive Ian Cheshire said he wants the company to become a world leader after doubling its value over the last four years. Shares were 7.4p higher at 307.4p.
Elsewhere, gaming stocks were higher despite warnings from trade bodies that a tax hike from 17% to 20% for fruit and slot machines would be a “definite blow” to the industry.
Ladbrokes was 3.6p higher at 156.1p, while rival William Hill added 6.8p to 249.9p.
The biggest Footsie risers were International Airlines Group up 6p at 179.3p, Kingfisher ahead 7.4p at 307.4p, Rexam up 6.8p at 430p and Aberdeen Asset Management ahead 3.9p at 251p.
The biggest Footsie fallers were Randgold Resources down 830p at 5765p, Fresnillo off 116p at 1621p, Vedanta Resources down 65p at 1287p and Antofagasta off 51p at 1141p.