A massive £36.2bn (€54bn) was wiped off the FTSE 100 Index today after the London market was hit by its biggest fall since May last year.
The Footsie has reached six-year highs in recent weeks but investors panicked on negative news from overseas and sent the index plunging to finish 148.6 points lower at 6286.1 – a drop of 2.3%.
Fears over interest rate rises in China dragged down all major markets and the Dow Jones Industrial Index showed few signs of recovery at the time of London’s close.
The news from China, pessimistic comments on the US economy from former Federal Reserve chairman Alan Greenspan and threats over South African mining taxes formed an unpleasant cocktail for investors.
The heavily-weighted mining sector led the fallers, with Xstrata down more than 6%, or 177p at 2479p followed by Lonmin 209p lower at 3165p. BHP Billiton was off 89p at 1051p and Antofagasta down 28p at 473.5p.
Fund managers were also under pressure from the wider market drop, with Amvescap off 37.5p at 612.5p and Man Group dipping 31p to 557p.
Reuters finished the day as the only top-flight firm in positive territory after Credit Suisse upgraded the news and information provider. The stock rose 6p to 432p.
The FTSE 250 Index also suffered the biggest fall in its 12-year history with a 431-point drop today.
Only three companies finished in positive ground led by aerospace parts business GKN, which reported strong sales and exceeded expectations with a doubling of underlying profits. Shares jumped more than 9%, or 30.25p to close at 351.75p.
But Avis Europe topped the fallers, slipping into reverse after the boss of the car hire company warned that margin targets would be missed because of continued tough trading conditions. The stock slumped nearly 15%, or 12.5p to 71p.
News that the French authorities are seeking to interview the former chief executive of online gaming company 888 Holdings, John Anderson, also sent the shares in the firm plummeting more than 9% today – down 10.2p at 99.75p.
The owner of Pacific Poker – also hit by US legislation banning online gaming last year – said that France made up an “immaterial” portion of sales and revenues but the news affected other shares in the sector with PartyGaming falling 3.75p to 36p and Sportingbet off 0.75p to 42.25p.
The market turmoil also thwarted a brief recovery at support services firm Alfred McAlpine after yesterday’s revelations of potential fraud which wiped more than 20% off shares. Citigroup maintained a buy recommendation on the firm - while admitting that investor confidence would take time to return – but the share finished off 1p at 475.5p.
Meanwhile, the market weakness affected the start of trading for Sports Direct International, which owns Sports World. The stock started at 300p, earning £929 million for founder Mike Ashley, but later fell back to stand at 281p.
The leading Footsie fallers were Xstrata off 177p at 2479p, Lonmin down 209p at 3165p, BHP Billiton off 89p at 1051p and Standard Life down 18.5p at 301p.