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Footsie plunges on first day of New Year trading

Published 04/01/2016

An office worker views a graph showing movement in the FTSE 100 Index
An office worker views a graph showing movement in the FTSE 100 Index
The FTSE 100 Index slumped 109.5 points to 6133.1

The Footsie plunged on the first day of trading in the New Year, dragged lower by market turmoil in China.

The FTSE 100 Index slumped 109.5 points to 6133.1, or 1.9%, after Chinese stock markets were automatically suspended after falls of at least 7% following weak manufacturing data from the world's second largest economy.

European markets were also affected by events in China, with Germany's DAX down 3.3% and the Cac 40 in France down 2%.

The suspension of markets in China is a new circuit-breaker measure introduced in early December, designed to limit the volatile trading the nation suffered last summer as its economy slows.

This was the first time this measure has been used by Chinese regulators, which led to trading ending an hour and a half early.

The China sell-off was sparked by a factory activity survey showing a contraction for the 10th consecutive month as well as falls in its yuan currency.

Spreadex financial analyst Connor Campbell said: "Welcome to 2016, though you'd be forgiven for thinking the markets were back in August 2015 with China causing some early New Year issues."

In London miners were biggest fallers, as their fortunes have risen on the decade long surge of the Chinese economy.

Anglo American was down 8%, Glencore fell 7%, while Antofagasta slipped 5%.

Last week the FTSE 100 Index ended the year 4.9% down on December 31, closing at 6242.3 and leaving investors out of pocket.

The market last year also closed 12% down from its all-time high of 7104 on April 27 of last year.

In recent weeks the market has been dragged lower by falls in Brent Crude, at around 37.53 US dollars, as major suppliers such as Saudi Arabia and Russia have continued pumping crude in a bid to defend their global market shares. The oil price has fallen by more than a third last year.

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