FTSE falls sharply from record high as global panic causes share sell-off

 

The FTSE 100’s surge towards all-time highs was brought to a spectacular halt today as panicking investors dumped shares in a global sell-off.

London’s blue-chip benchmark has risen in every session bar one since the end of April in a seemingly inexorable rise towards the 6930 record hit at the height of the dot-com boom in 1999.

But City dealing rooms took fright today over growing calls among US Federal Reserve rate-setters, led by Ben Bernanke, to scale back the money-printing efforts which have helped fuel the global share rally. Some pressed to ease back quantitative easing as soon as next month, according minutes of its latest meeting.

The Footsie sank 133.20 points, or 1.9 per cent, to 6706.70 — wiping £34 billion off the index in a torrid session for equities. Japan’s Nikkei Average, previously bolstered by prime minister Shinzo Abe’s “shock and awe” efforts to kick-start the economy, suffered even heavier damage after an unexpected decline in Chinese manufacturing output in May. The index sank 7.3 per cent in the worst sell-off since the nation was struck by the tsunami in March 2011.

IG Index analyst Chris Beauchamp called the sell-off an “undignified rush to the exit”. He said: “The mood has switched from greedy to fearful.” The FTSE’s mining contingent was among the worst-hit amid fears over waning Chinese demand for commodities, with all but two of the top flight’s constituents losing ground.

European markets were also hit as Germany’s Dax fell 2.6 per cent and France’s CAC 40 per cent lost 2.4 per cent. Spanish and Italian bourses were down 2.1 per cent and 2.7 per cent respectively as investors sought safe havens, pushing down yields on UK, US and German sovereign debt.

Even after today’s sell-off, the Nikkei remains 40 per cent higher in 2013 and London’s benchmark 13 per cent ahead. “Even if this does turn into a sustained down move over a period of a week or two, the fundamental narrative of central bank easing and improving economic data should reassert itself,” Beauchamp added.

The sell-off came against the backdrop of a contraction for Germany’s private sector in May signalling stagnation in the second quarter of the year. France’s decline also continued over the month according to financial data provider Markit. The UK’s growth of 0.3 per cent in the first quarter of 2013 was left unrevised today.

Start your day with The Independent, sign up for daily news emails
News
Hillary Clinton comments on viral Humans of New York photo of gay teenager
Arts and Entertainment
The gang rape scene in the Royal Opera’s production of Gioachino Rossini’s Guillaume Tell has caused huge controversy
music
Sport
wimbledonScot will face Ivo Karlovic next
Life and Style
Kissing
life
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Sales Assistant / Buyer

£15000 - £17000 per annum: Recruitment Genius: This company offers a range of ...

Recruitment Genius: Customer Service Advisor

£15000 - £16000 per annum: Recruitment Genius: Customer Service Advisors are r...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £45K: SThree: SThree were established in 1986....

Recruitment Genius: Compliance Manager

£40000 - £60000 per annum: Recruitment Genius: A Compliance Manager is require...

Day In a Page

Is this the future of flying: battery-powered planes made of plastic, and without flight decks?

Is this the future of flying?

Battery-powered planes made of plastic, and without flight decks
Isis are barbarians – but the Caliphate is a dream at the heart of all Muslim traditions

Isis are barbarians

but the Caliphate is an ancient Muslim ideal
The Brink's-Mat curse strikes again: three tons of stolen gold that brought only grief

Curse of Brink's Mat strikes again

Death of John 'Goldfinger' Palmer the latest killing related to 1983 heist
Greece debt crisis: 'The ministers talk to us about miracles' – why Greeks are cynical ahead of the bailout referendum

'The ministers talk to us about miracles'

Why Greeks are cynical ahead of the bailout referendum
Call of the wild: How science is learning to decode the way animals communicate

Call of the wild

How science is learning to decode the way animals communicate
Greece debt crisis: What happened to democracy when it’s a case of 'Vote Yes or else'?

'The economic collapse has happened. What is at risk now is democracy...'

If it doesn’t work in Europe, how is it supposed to work in India or the Middle East, asks Robert Fisk
The science of swearing: What lies behind the use of four-letter words?

The science of swearing

What lies behind the use of four-letter words?
The Real Stories of Migrant Britain: Clive fled from Zimbabwe - now it won't have him back

The Real Stories of Migrant Britain

Clive fled from Zimbabwe - now it won’t have him back
Africa on the menu: Three foodie friends want to popularise dishes from the continent

Africa on the menu

Three foodie friends want to popularise dishes from the hot new continent
Donna Karan is stepping down after 30 years - so who will fill the DKNY creator's boots?

Who will fill Donna Karan's boots?

The designer is stepping down as Chief Designer of DKNY after 30 years. Alexander Fury looks back at the career of 'America's Chanel'
10 best statement lightbulbs

10 best statement lightbulbs

Dare to bare with some out-of-the-ordinary illumination
Wimbledon 2015: Heather Watson - 'I had Serena's poster on my wall – now I'm playing her'

Heather Watson: 'I had Serena's poster on my wall – now I'm playing her'

Briton pumped up for dream meeting with world No 1
Wimbledon 2015: Nick Bollettieri - It's time for big John Isner to produce the goods to go with his thumping serve

Nick Bollettieri's Wimbledon Files

It's time for big John Isner to produce the goods to go with his thumping serve
Dustin Brown: Who is the tennis player who knocked Rafael Nadal out of Wimbeldon 2015?

Dustin Brown

Who is the German player that knocked Nadal out of Wimbeldon 2015?
Ashes 2015: Damien Martyn - 'England are fired up again, just like in 2005...'

Damien Martyn: 'England are fired up again, just like in 2005...'

Australian veteran of that Ashes series, believes the hosts' may become unstoppable if they win the first Test