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Shares slide after US rate decision FTSE slides after US rate decision
(about 3 hours later)
Shares in Europe and the US fell after the Federal Reserve's decision not to raise rates, as concerns about the global economy were renewed. (Close): Shares in London and elsewhere fell following the Federal Reserve's decision not to raise rates, as concerns about the health of the global economy are renewed.
The FTSE 100 closed down 1.3% at 6,104.11 points.
The Fed made it clear that worries about the global economy had influenced its decision to keep rates on hold.The Fed made it clear that worries about the global economy had influenced its decision to keep rates on hold.
"The outlook abroad appears to have become less certain," said Fed chair Janet Yellen, following the decision."The outlook abroad appears to have become less certain," said Fed chair Janet Yellen, following the decision.
On Wall Street, the Dow Jones opened down 1.4% and there were heavy falls in Europe. Commodities shares were among the biggest fallers.
The UK's FTSE 100 was down 118.18, nearly 2%, at 6,068.81. In Germany, the Dax index fell 3.5% and France's Cac 40 dropped 3.4%. Glencore fell almost 5%, as well as fears about demand from a slow global economy, there was added pressure amid questions about its share placing.
There are concerns that markets could now face a prolonged period of uncertainty as to the direction of US interest rates.There are concerns that markets could now face a prolonged period of uncertainty as to the direction of US interest rates.
"Speculation will now shift to December as the next most likely month for US rates to start rising," said Chris Williamson, chief economist at Markit. Brenda Kelly, head analyst at London Capital Group, said: "Markets have taken cues from the US, but uncertainty prevails and choppiness is the only certain result. Deflation is a concern. China is a concern, and oil prices look set to take another leg lower."
"The 'data dependent' Fed will want to see further robust non-farm payroll growth between now and then as well as indications that the pace of economic growth is not wilting under the pressure of China's slowdown." Premier Oil was down 7% but Rangold Resources was up 4% on hopes there would be an upsurge in demand for precious metals it mines as at times of investment uncertainty some seek out gold and silver perceiving them as safer places to park their money.
Chris Beauchamp, senior market analyst at IG, said: "There are two crucial things to note in the accompanying statement [from the Fed]. On Wall Street, the Dow Jones was down 1% in afternoon trading and there were heavy falls in Europe.
"First, the US central bank is responding to global concerns, especially in emerging markets and China. Recent turmoil there underlines the fragility of the situation, and US policymakers are alive to the risks this poses to the US. In Germany, the Dax index fell 3% and France's Cac 40 dropped 2.5%.
"Second, they have revised down their growth and inflation expectations, a signal that they are concerned that all is not well with the US economy either." On the currency markets, the pound was flat against the dollar to $1.55.8, and was up 0.56% against the euro at €1.37.1.
On the currency markets, the pound rose 0.3% against the dollar to $1.5633, and was up 0.46% against the euro at €1.3697.
Following the Fed's decision the dollar fell sharply against the yen, dropping below the 120 yen mark. The move hit shares in Japan - particularly among exporting firms - and the country's Nikkei index closed down 2%.