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Volatile session for FTSE as anxiety over China continues

Published 26/08/2015

A city worker walks past a stock ticker screen at the London Stock Exchange in the City of London.
A city worker walks past a stock ticker screen at the London Stock Exchange in the City of London.

The FTSE 100 Index endured a volatile session today in a see-saw of ups and downs amid continuing anxiety over China.

Early trading saw the index of the top 100 UK-listed companies slump more than 100 points to below 6,000, wiping more than £30 billion off their combined value.

Sentiment later recovered gradually to see it edge above its closing mark but it then fell back into the red, despite stocks in New York surging higher on the opening bell in Wall Street - after encouraging US factory data.

London's listed mining giants - which have been badly hit by the slowdown in China and its impact on commodity prices - were at the heart of the volatility, seeing both falls and climbs during the day.

The latest turbulence came after a 3.1% rise in the FTSE 100 in the previous session, boosted by an interest rate cut from China.

That had followed a 10-day run of declines for the index, its longest losing streak since 2003, including a 4.7% fall on Monday that was the joint-worst one-day drop since the dark days of the downturn in 2009.

The latest session in London saw an initial steep fall of around 130 points, or 2%, following a Wall Street slump late the previous day and another fall overnight for China's Shanghai Composite.

Connor Campbell, financial analyst at Spreadex, said European markets had later been buoyed up by hints that the European Central Bank would be ready to inject more stimulus into the eurozone economy if needed.

But he added: "Such robust trading couldn't last long, with losses beginning to widen once again after the post-US open dust settled."

He said the situation would become even more complicated tomorrow with the latest second quarter US growth estimate expected to see the performance of the world's biggest economy revised up.

Yet the reading "might struggle to make itself heard if the markets have to endure another choppy Asian session".

Global markets have been rocked in recent weeks by the slowdown in China, the world's second biggest economy, and the depreciation of the yuan.

Chancellor George Osborne has said the volatility showed that "lots of risks" remained in the global economy and that Britain was "not immune to what goes on in the world".

Recent falls have seen the FTSE 100 fall into "correction" territory, more than 10% off its all-time closing high of 7,104 in April.

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