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London market hits three-week low as investors take flight from Tesco

Published 10/06/2016

The FTSE 100 Index was 1.9% down at 6115.8 as investors took flight from Tesco
The FTSE 100 Index was 1.9% down at 6115.8 as investors took flight from Tesco

The London market plummeted to a three-week low as financial stocks and supermarket giant Tesco took a hammering.

The FTSE 100 Index was 1.9% down at 6115.8 as investors took flight from Britain's biggest grocer after it sold off the Giraffe restaurant chain and its 95% stake in Turkish supermarket Kipa.

Shares in Tesco were down more than 4%, while rival Sainsbury's sank 2%.

However, it was the heavy-weight financial firms which took the biggest hit, with Standard Life dropping 4%, while Barclays and Old Mutual were both down 3%.

The sharp sell-off came as British investors signalled the retreat as banking and insurance firms continue to see their profits hampered by low interest rates.

Commodity stocks also played their part in dragging the market lower, with a 2% drop in the price of oil taking its toll on the mining companies.

Brent crude slid one dollar and six cents to 50.89 US dollars a barrel amid concerns that a report on oil rig counts in America could indicate a rise in US production.

BHP Billiton was nearly 4% lower, Anglo American dropped 3% and Glencore edged 2% down.

But Silver miner Fresnillo was in the ascendency, up just under 1%, as traders dived into safe havens.

Across Europe, Germany's Dax fell 2.5% and the Cac 40 in France dropped 2.2%.

Sterling was 0.8% lower against the dollar at 1.434, as it continued to be weakened by fears that Britain is heading for the European exit door.

The pound was also down 0.5% against the euro at 1.271, despite brighter signs for the UK economy with the construction industry posting its largest growth for more than two years in April.

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