FTSE 100 close: Factories pull shares down
Investors returned from the holiday weekend today to find shares hit by poor factory output data and dips in world stocks.
Slump: Shares have been hit by volatile world markets
Manufacturing output fell during August, defying City predictions that it would rise, raising fears that the UK economy might still be some way from recovery.
The FTSE 100 flopped, losing a total of 89.2 points (1.8%) to close at 4,819.7.
Shares on the index have soared 42% since hitting a trough in March, and were up 6.4% in August alone, but a volatile session of trading on the world markets yesterday saw the recent wave of optimism give way to renewed fears over the state of the global economy.
After it closed down 47.9 points last night, the Dow Jones had a decent first couple of hours today before it joined the Footsie and plummeted downwards, losing 45.8 157.4 points to stand at 9,338.9.
'Defensives had been leading the way this morning, so it looked like the market was not feeling altogether happy with things,' said Mike Lenhoff, strategist at Brewin Dolphin.
'Maybe the market is just a bit uncomfortable at having progressed non-stop against a background of incredibly good newsflow,' he said.
Pulling the Footsie back were the miners. Eurasian Natural Resources was the worst hit, shedding 7% or 60p to 805p. Vedanta lost 94p to 1,698p; Xstrata saddened 33.5p to 793p; and Lonmin was down 72p at 1,389p.
The sector was reeling after the price of copper slipped 3.2% following a sell-off in Shanghai, and crude suffered a 4% drop overnight.
Oil's set-backs rippled over to energy firms on the FTSE 100, with Royal Dutch Shell falling 19p to 1,655p and Cairn Energy suffering a 98p deficit at 2,409p.
News that it has slipped down the bank 'safety league' had investors offloading Lloyds Banking Group shares in early trading, and its price sank 5.33p to 106.01p.
Barclays also lost out, with the share price sinking 10.25p to 10.25p and RSA Insurnace Group was also head in the wrong direction, losing 6.2p to 124.4p after weekend reports suggested it is considering looking to raise money through a rights issue.
Traders were keeping an eye on the housebuilding sector after Taylor Wimpey and Barratt Developments fell heavily, despite recent signs of improved confidence in the housing market.
Shares in the FTSE 250-listed Taylor Wimpey dropped 8% or 4.2p to 48p, and Barratt slipped 16.4p to 229.4p.
Only a handful of London shares made traded in the positive on the Footsie.
Drugs firms jumped onto the risers' board in the morning on the blue-chip FTSE 100, before falling back slightly.
AstraZeneca was up 16p to 2,856p after it said at the weekend that trials of a new blood-thinning pill had produced a 16% drop in heart attack and stroke deaths among patients.
Meanwhile pharmaceutical company GlaxoSmithKline held ground at 1,203p.
Annual pre-tax profits at Dechra Pharmaceuticals, which operates in the veterinary sector, rose 38% to £16.1m, the company reported today - but its shares fell back to close 14.5p down at 414.3p.
Other defensive stocks on the front foot included British American Tobacco after a gain of 14p to 1,888p, and Imperial Tobacco, which lifted in the morning but closed 7p down at 1,723 on the day.
National Express was one of the biggest risers in the FTSE 250 amid reports that Stagecoach is considering a bid for the firm, which recently rejected an attempt to take it private by a CVC-led consortium. Shares rose 6.6p to 405p, while rival Go-Ahead lost 6p to 1,349p ahead of results later this week.
On the smaller AIM market, independent oil and gas producer firm Gulfsands Petroleum was 6.5p better at 236.5p amid reports that it is in takeover talks with China's state-owned Sinochem.
Sinochem, which is offering up to £400m for the business, is expected to table the bid 'within weeks'.
Tomorrow's agenda
Investors will want to discover more about DSG's plans to compete with Best Buy at its AGM tomorrow . The electrical retailer, owner of Curry's Digital and PC World, is preparing for a battle to retain market share when US electricals group Best Buy starts trading in Britain next year.
Stockbrokers Hargreaves Lansdown reports its annual results, with analysts expecting a pre-tax profits to rise around 17% to £71m. Numis reckons the firm will deliver a 21% increase in earnings, and expects to see a 'creditable performance assisted by a very strong cash margin'
Design and engineering consultancy Scott Wilson will update the market on its first-quarter trading. Its shares have performed well since final results were posted on 30 June, and it was awarded the £9.8m contract from Crossrail for design work at Paddington train station.
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