The FTSE 100 Index plunged more than 2% today as investors headed for the exit following Germany’s shock move to prevent speculators betting against the eurozone.
Markets across Europe tumbled into the red after the German ban on short-selling of eurozone government debt and shares of major financial companies late yesterday.
The Footsie fell 130.2 points to 5177.2, while the Cac 40 in France dropped 2.6% and Germany’s Dax suffered a 2.7% fall.
Wall Street’s Dow Jones Industrial Average fell 1% overnight after the news and futures markets pointed to another hefty decline today.
The surprise move from Germany – in the wake of a eurozone crisis triggered by the near-bankruptcy of Greece – sent the euro to new four-year lows against the dollar, while sterling also fell to 1.43 against the US currency.
Oil prices also slumped to an eight month low of 68 US dollars a barrel on investor concerns that efforts to contain Europe’s debt crisis could fail and deep government spending cuts will hurt economic growth.
There were no gainers on London’s Footsie as it made broad-based losses led by several ex-dividend stocks and fallers in the heavyweight mining sector. Xstrata was among the biggest casualties with a 7% or 70p slide to 939.5p.
Home Retail Group, which owns Argos and Homebase, was hit particularly hard as it also turned ex-dividend, meaning new investors will not share in the next shareholder payout. The retailer’s shares fell 20.4p to 254.1p.
Scottish & Southern Energy was also caught up in the sell-off despite a “moderate” increase in profits and plans to hike dividends by at least 2% above inflation for the next three years. The energy firm was off 32p to 1069p.
And British Airways continued to suffer despite services returning to normal today after its strike threat woes and ash cloud disruption, with shares down 8.1p to 192.3p.
Land Securities was also impacted by the wider sell-off with shares down 3%, or 17.5p to 617.5p, in spite of annual results confirming a “dramatic turnaround” in the commercial property market.
All Bar One pubs group Mitchells & Butlers bucked the trend in the FTSE 250 after interim profits rose 55% and amid signs of improved sales growth thanks to its strategy to focus on higher-margin food.
Shares in M&B rose 7.7p to 311.1p, while Robinsons drinks giant Britvic was another to post share gains today. The stock added 0.3p to 459p following yesterday’s interim results and news of a French acquisition.