Global equity sell-off sends FTSE 100 down by more than 1%
London stocks followed US, Asian and European markets into the red.
London’s blue chip index was knocked by more than 1% as investors reacted to a drop in global equities by cashing in their UK positions.
The FTSE 100 ended the day down around 83.55 points at 7,587.98 points, with banks taking the largest hit.
David Madden, a market analyst at CMC Markets UK, said: “It is a broad decline on London as dealers are cashing in their positions and locking in profits.
“The large sell-off in the US last night got traders nervous and now the fear has spread.”
He noted the sea of red across financial stocks, with fears of another housing crash weighing on the likes of Standard Chartered down nearly 2.9% at 814.1p, Scottish Mortgage Investment Trust down 2.8% at 463.4p and Barclays down 2.8% at 201.75p
“Banks came under additional pressure after the Financial Conduct Authority (FCA) urged lenders to increase checks on interest-only mortgages,” Mr Madden said.
A slight recovery in Sterling did little to boost interest in UK stocks. The pound was trading higher by nearly 0.5% against the US dollar at 1.414, and was up 0.3% versus the euro at 1.140.
Indexes in continental Europe took a spill, with the French Cac 40 and German Dax ending the day down about 0.9% each.
Brent crude prices were also suffering from profit taking, sending the commodity down 1.3% at around 68.50 US dollars (£48.43) per barrel.
In UK stocks, RBS dropped 8.2p to 292p after ratings agency Moody’s said it was reviewing the bank for a downgrade in light of the likely impact of ring-fencing regulations.
Moody’s said it expects to complete its review by April this year.
Shares in oil giant BP tumbled 1.5%, or 7.7p, to 507.9p.
The company said on Tuesday that it was trialling mobile charging points for electric vehicles at its UK forecourts this year after investing five million US dollars (£3.6 million) in US-based firm FreeWire Technologies.
Kingfisher fell 4.1p to 351p amid news its B&Q business was swinging the axe on 200 head office jobs as part of a cost-cutting drive while Clydesdale and Yorkshire Banking Group (CYBG) dropped 12.4p to 318.8p after warning that growth in mortgage lending would slow amid competition in the sector.
Imperial Leather-owner PZ Cussons took a hit, with shares dropping nearly 5.6%, or 18.4p, to 311.6p, on the back of a 15% fall in adjusted half-year pre-tax profits to £34 million.
It suffered from tougher UK trading conditions as soaring inflation encouraged shoppers to swap brand name soaps for discounted rivals.
Domino’s Pizza Group rose 4.8p to 355.3p after the food chain reported an 18.2% jump in sales over the 13 weeks to December 24, bolstered by the start of the X Factor final on December 2, which acted as the “catalyst” for its biggest day of sales for the year.
The biggest risers on the FTSE 100 were Reckitt Benckiser Group up 93p at 6,880p, Coca Cola HBC up 23p at 2,424p, Informa up 6p at 693.4p and Halma up 8p at 1,275p.
The biggest fallers on the FTSE 100 were Standard Chartered down 24.6p at 814.1p, Scottish Mortgage Investment Trust down 13.6p at 463.4p, Barclays down 5.9p at 201.75p and Royal Bank of Scotland down 8.2p at 292p.