China fears wipe £34bn off FTSE 100 on first day of 2016 trading

 Mining companies were hardest hit

Plunging Chinese stocks spooked FTSE 100 investors on the first day of trading.

The FTSE 100 was down 2 per cent at lunchtime on Monday, wiping £34 billion off its value. 

Mining companies were hardest hit. China is a major importer of raw materials from UK companies and elsewhere.

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The FTSE 100 was down 2 per cent at lunchtime on Monday, wiping £34 billion off its total value. 

Anglo American shares fell 7 per cent before recovering a little by lunchtime, while Glencore was 6.6 per cent lower. 

The UK mining index fell 3.4 per cent, it's biggest one-day percentage drop since mid-December. 

The Dow Jones in the US was also down 2 per cent in early trading as China continued to depress market sentiment. 

Middle Eastern tensions added another layer of uncertainty. Saudi Arabia's decision to break off diplomatic ties with Iran saw the price of brent crude rise slightly before it too was weighed down by China fears. 

Other European markets suffered. Frankfurt was down by 3.7 per cent, Paris was hit by 2.7 per cent and Madrid was off 2.5 per cent.

The bloodbath in Europe followed the suspension of Chinese stock markets after a plunge of 7 per cent triggered a circuit breaker intended to curb volatility.

The Shanghai Composite, the benchmark Chinese index, slipped 6.9 per cent lower, while the technology-heavy Shenzhen Composite fell by more than 8 per cent, before trading could be halted 90 minutes before the end of the session.

Some analysts pointed to negative factory output data, but many cited the end of a ban on big shareholders selling shares. The ban was implemented during last summer's volatility and is now being phased out. 

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