FTSE down as fears of recession linger

Stock markets began a second week of turmoil today as lingering fears over the US economy weighed on the FTSE 100 Index.

The London market was 107.2 points lower at 5761.8 by mid-morning – a fall of almost 2% – as leading shares followed Asian markets lower.

After a late plunge in US markets on Friday, Tokyo’s benchmark Nikkei 225 and Hong Kong’s Hang Seng were both nursing 4% falls, with China’s Shanghai exchange down 7%.

The volatility is likely to continue later today with futures markets indicating further falls expected on Wall Street when trading begins this afternoon.

Investors around the world have been jittery for weeks about a US slump, which would weaken demand for exports and drag on global growth.

The leading victims were the heavily-weighted mining stocks, which accounted for the Footsie’s top four fallers.

Anglo American, off 140p at 2450p, and Rio Tinto – down 235p at 4460p – led the London market lower, although Xstrata was the exception to the rule after talk of a bid for the metals producer from Brazil’s Vale group. Shares were up 15p to 3515p.

It was also a poor session for the big-hitters in the petrochemical sector. Oil major Royal Dutch Shell – expected to reveal a tough fourth quarter in annual results this week – fell 58p to 1748p, while BP fell 19p to 519p.

Banks were on the back foot amid the gloomy economic sentiment, with Lloyds TSB down 14.5p to 414.75p. Barclays slipped 7.75p to 479.75p, and Royal Bank of Scotland was 10.5p lower at 380.5p.

Building supplies firm Wolseley, which does half of its business in the US, was also in the red, with shares off 29.5p to 700p. Housebuilders followed suit, with Charles Church firm Persimmon down 4%, or 33p to 793p. Taylor Wimpey fell 6p to 187.4p.