London joined in with the heavy selling across European stock markets on Thursday amid discomfort about rising US interest rates.
The FTSE 100 finished down 139 points or 1.94% at 7,006.93, close to breaching the 7,000 level for the first time since late March. Sterling was up fat against the dollar at 1.3201 and 0.4% lower versus the euro at 1.1404.
European and Asian stocks tumbled on the back of Wall Street's worst losses in eight months, with the Dow suffering its biggest daily decline of the year and the Nasdaq its worst day of trade since June as worries about rising bond yields, trade tensions, Italy and concerns about valuations heading into earnings season sparked heavy selling.
US stocks were less tumblesome on Thursday after a softer inflation reading which helped Treasury yields to cool off a bit.
“This might be a dead cat bounce,” said analyst Neil Wilson at Markets.com. “There is still a fair bit of nervousness out there and this situation could easily change as the trading day progresses.”
While there are worries about the huge US debt load, Wilson said reasons to optimistic were to be found in solid US growth fundamentals, with earnings growth set come in around 20% this quarter.
“As ever though, when fear starts to stalk investors you never known when it can all go sour again. I would simply contend that this is not about fear but about repositioning based on the updated yield picture that emerged last week,” he added.
Amid the gloom in London, precious metals miners glistered, with Fresnillo, Randgold and Centamin all racking up strong gains as investors piled into the safety of gold.
Homewares retailer Dunelm also managed to defy the gloom, rising 5% after it said revenues had picked up to 4.2% on a like-for-like basis in the first quarter of its financial year after a finish to the previous period.
Paper and packaging group Mondi was resisting the sell-off as it said higher average selling prices, good cost containment and contributions from recent acquisitions boosted third quarter underlying profits.
Housebuilders were in the red, with Barratt Developments, Taylor Wimpey and Persimmon both lower after the latest survey from the Royal Institution of Chartered Surveyors showed UK house sales expectations over the next 12 months have turned negative. The survey also revealed that the balance of surveyors reporting that house prices have risen over the last three months fell to -2 in September from +1 in August, below consensus expectations of +2.
Barratt fell the furthest as its stock went ex-dividend.
Urban regeneration specialist Countryside Properties was caught up in the malaise despite reiterating guidance and posting a jump in total completions and said demand for its homes remains strong.
Keller tumbled nearly 28% after issuing a profit warning on its Asia Pacific business, sparking a strategic review of the division. The construction engineer said the rest of its business was trading in line with expectations.
WH Smith was under the cosh after the retailer reported a drop in pre-tax profit for the year to the end of August as it took some one-off costs from a restructuring of its high street business.
Elsewhere, wealth manager Hargreaves Lansdown warned of an “industry-wide slowdown” in retail flows, while recruiter Hays tanked as it posted a slower quarterly fee growth rate.
Likewise, third-quarter updates from Moneysupermarket and Jupiter Fund Management were not enough to see either escape the bloodbath.
In broker note action, Auto Trader was lifted to 'neutral' by Macquarie while Gocompare.com was initiated at 'outperform'.
Along with Barratt, Centrica, HSBC Holdings, Tesco, Close Brothers, OneSavings Bank, Primary Health Properties, Spectris, Spirax-Sarco Engineering, Superdry, Ted Baker and Weir Group were among the companies providing an extra weight on the FTSE 350 as their stock went ex-dividend.
FTSE 100 (UKX) 7,007.40 -1.94%
FTSE 250 (MCX) 18,847.44 -2.04%
techMARK (TASX) 3,259.53 -1.70%
FTSE 100 – Risers
Fresnillo (FRES) 839.00p 8.65%
Randgold Resources Ltd. (RRS) 5,706.00p 8.36%
Ocado Group (OCDO) 779.40p 2.23%
Ferguson (FERG) 5,563.00p 1.72%
Tesco (TSCO) 218.40p 1.02%
Coca-Cola HBC AG (CDI) (CCH) 2,314.00p 0.87%
Burberry Group (BRBY) 1,743.00p 0.87%
Compass Group (CPG) 1,555.00p 0.78%
Morrison (Wm) Supermarkets (MRW) 248.30p 0.67%
Intertek Group (ITRK) 4,435.00p 0.57%
FTSE 100 – Fallers
Barratt Developments (BDEV) 487.80p -12.14%
Hargreaves Lansdown (HL.) 1,852.50p -4.90%
3i Group (III) 849.40p -4.84%
Next (NXT) 5,254.00p -4.51%
Taylor Wimpey (TW.) 158.10p -4.21%
Schroders (SDR) 2,882.00p -4.09%
Prudential (PRU) 1,582.00p -3.89%
Berkeley Group Holdings (The) (BKG) 3,310.00p -3.78%
Centrica (CNA) 147.00p -3.70%
Evraz (EVR) 514.60p -3.67%
FTSE 250 – Risers
Centamin (DI) (CEY) 98.36p 8.09%
Dunelm Group (DNLM) 571.50p 5.35%
Hochschild Mining (HOC) 156.50p 4.96%
Polymetal International (POLY) 636.80p 4.60%
Moneysupermarket.com Group (MONY) 275.10p 4.20%
Plus500 Ltd (DI) (PLUS) 1,264.00p 2.76%
Amigo Holdings (AMGO) 207.60p 2.57%
Greencore Group (GNC) 200.30p 2.46%
Hill & Smith Holdings (HILS) 942.50p 1.73%
TI Fluid Systems (TIFS) 198.00p 1.54%
FTSE 250 – Fallers
Keller Group (KLR) 667.13p -30.65%
WH Smith (SMWH) 1,807.00p -11.16%
Countryside Properties (CSP) 282.80p -10.62%
Hays (HAS) 157.60p -10.45%
Equiniti Group (EQN) 211.50p -8.84%
Hikma Pharmaceuticals (HIK) 1,682.50p -7.43%
Premier Oil (PMO) 123.20p -7.16%
Jupiter Fund Management (JUP) 351.60p -6.79%
Polypipe Group (PLP) 319.40p -6.72%
VinaCapital Vietnam Opportunity Fund Ltd. (VOF) 318.00p -6.47%