Britain’s blue-chip benchmark was today on course for its worst performance this year as fears over slowing Chinese growth sent the FTSE 100 to an eight-month low.
Sharp sell-offs on Wall Street and in Asian markets also spooked investors as the index fell for the ninth consecutive day, down 36.48 points at 6331.41 — its longest losing streak since 2011.
The Footsie has fallen 3.7% since the start of the year and is now down 11.2% from its peak of 7122.74 on April 27.
The index has been dragged lower by major commodity and energy stocks such as Glencore, Shell and Rio Tinto which together make up 20% of the FTSE 100.
Since it started falling on August 11, the index has lost 355 points, wiping £91 billion off the value of the country’s leading shares.
“Global markets are in panic mode as the full scale of China’s slowdown becomes clearer,” said Angus Nicholson, market analyst at IG.
“The word on everyone’s lips is deflation — poison for equity markets. The phenomenal six-year bull market may finally meet its match in China-induced global deflation.”
Activity in Chinese factories dropped sharply last month, according to data released today.
The Caixin/Markit manufacturing purchasing managers’ index fell to 47.1 from 47.8 in July. A figure below 50 indicates contraction.
The Shanghai Composite index gave up almost all its recent gains, closing 4% lower, while the largest market in Asia, Japan’s Nikkei, ended down by 3%.
European markets were all generally lower with 0.5% falls in Paris, Frankfurt and Madrid.
The Chinese numbers hit oil prices further with the US benchmark heading for its biggest weekly loss since 1985.