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FTSE 100 down 2% as oil and commodity prices fall | |
(about 1 hour later) | |
The UK market dropped 2% in morning trade, in line with other European markets, with miners leading the falls after commodity prices declined. | |
The benchmark FTSE 100 fell below the 6,000 level, and by mid-morning was down 126.55 points at 5,982.16. | |
Mining shares led the falls after commodity prices continued to weaken. Copper prices hit two-week lows and oil prices dropped after rising on Monday. | |
Among the mining sector, Glencore fell 9% while Anglo American was down 7%. | |
Commodity prices have been hit by the slowdown in the Chinese economy, which is a huge importer of raw materials. | |
Crash warning | |
Markets were rattled last week after the US Federal Reserve decided not to raise interest rates, mainly due to the concerns over the health of the global economy, particularly China. | |
However, on Monday, Federal Reserve Bank of Atlanta president Dennis Lockhart said he was "confident" US rates would rise this year, | |
"With the FTSE 100 tumbling over 120 points in two hours this morning, it is becoming clear that there is a distinct possibility of yet another crash in financial markets," said Joshua Mahony, market analyst at IG. | |
"The steroids of monetary policy may have brought us to heights previously unseen in global markets, yet as the Fed and Bank of England begin to wean us off this artificial high, we are coming to find ourselves perilously exposed to another major sell-off." | |
Big falls were also seen across other European markets, with Germany's Dax index down 2.2% and France's Cac 40 index dropping 2.8%. | |
Shares in carmakers saw the biggest falls, as the fallout continued from Volkswagen's rigging of US car emissions tests. | |
Shares in VW dived another 18%, and rival BMW was down more than 6%. In France, shares in Renault dropped 7%. | |
AG Barr loses fizz | |
Back in London, shares in the AA fell 7.8% after it said half-year revenues dipped 1.4% to £485m. | |
The decline was down to lower revenues from its insurance business. | The decline was down to lower revenues from its insurance business. |
The AA also warned that the planned rise in insurance premium tax, due in November, was likely to affect trading in both its insurance and roadside assistance businesses. | The AA also warned that the planned rise in insurance premium tax, due in November, was likely to affect trading in both its insurance and roadside assistance businesses. |
Also in the FTSE 250, shares in Irn-Bru maker AG Barr fell 5.2% after it reported an 11.3% drop in half-year pre-tax profits to £16.9m, following "an extremely demanding six months". | |
The company said trading had been hit by increasing competition and by the recent poor weather, although it expects full-year profits to be "broadly" the same as last year. | The company said trading had been hit by increasing competition and by the recent poor weather, although it expects full-year profits to be "broadly" the same as last year. |
On the currency markets, the pound fell 0.23% against the dollar to $1.5473, and dropped 0.27% against the euro to €1.3816. |