Inflationary concerns at home and abroad hit investors’ confidence today as the London market slumped by more than 1%.
An unexpected rise in the rate of inflation to 3.2% in the UK in October fuelled negative sentiment and added to concerns over speculation that China would tighten monetary policy to cool its own cost of living figure.
A poor show from the banking sector fuelled by fears over sovereign debt crises in Ireland, Greece and Portugal, compounded losses on the FTSE 100 Index, which fell 96 points at 5724.
Ireland was under intense European pressure to accept a massive financial bail-out – not just to rescue the Irish economy but to save the euro itself. But ahead of talks between the 16 eurozone nations, Dublin was still insisting it needed no help from either the EU or the International Monetary Fund.
Royal Bank of Scotland, which owns the Ulster Bank, saw shares dip more than 1% or 0.6p to 41.8p, while Lloyds followed suit, losing 2.2p to 67.6p. Barclays and HSBC were also down 4.4p to 278.1p and 15p to 667p respectively.
The potential impact of action to tackle inflationary pressures weighed on mining stocks, with Kazakhmys down 67p at 1447p, Antofagasta off 59p at 1379p, Fresnillo dipping 53p at 1400p and Xstrata drifting 47p to 1334p.
In corporate news, fashion house Burberry reported a stellar 50% rise in profits to £118m (€138m) after strong sales of leather handbags and menswear. The luxury clothing retailer said a move to bolster operations in China through buying out its franchise partner in the country had also paid off. Shares were up 4p at 1024p.
Investors were also focused on events outside the top flight after results from second-tier stocks including Taylor Wimpey and Enterprise Inns.
The housebuilder lifted 3% or 0.8p to 25.7p after it said its full-year profits were likely to be at the upper of its expectations. Taylor also reported progress on refinancing talks with banks in a move that should free the company from some of its more onerous covenant restrictions.
Enterprise Inns moved in the opposite direction, down 13.9p to 95.7p, after posting a narrower-than-expected fall in full-year profits. However, analysts expressed disappointment that the UK pubs giant will not be paying a dividend.
Low-cost airline easyJet announced plans for shareholder payouts from next year but saw its shares slip 21p to 451.1p after a decent run for the stock.