London close: Stocks slide as Yellen sparks recession worries

The FTSE 100 slumped on Thursday as Federal Reserve chair Janet Yellen said there was a “chance” of a recession.

Speaking to the Senate Banking Committee, Yellen reiterated that the financial turmoil abroad could impact growth in the US economy.

"There is always some chance of recession in any year," she said. "But the evidence suggests that expansions don't die of old age."

She also repeated comments she made on Wednesday to the House Financial Services Committee that the Fed had considered negative interest rates in 2010 but decided it was not the best action at the time. Yellen left the door open to negative interest rates in the future.

"In light of the experience of European countries and others that have gone to negative rates, we're taking a look at them again, because we would want to be prepared in the event that we would need (to increase) accommodation. We haven't finished that evaluation. We need to consider the institutional context and whether they would work well here. It's not automatic," she said.

The Swedish Riksbank decided to cut interest rates to -0.5% from -0.35% on Thursday, adding to worries about Europe’s banks. Low or negative interest rates hurt banks’ profits.

A profit warning from France’s Societe Generale also fuelled concerns about the health of the banking sector. SocGen warned on Thursday that it would not achieve its targeted increase in profits this year due to tighter capital requirements and challenging market conditions.

Banking stocks in the UK also took a hit from the news, including Barclays, HSBC and Standard Chartered.

Concerns about a global sell off hit other financial service providers and investment companies, including Aberdeen Asset Management and Hargreaves Lansdown.

Another drop in oil prices weighed on sentiment with Brent crude down 2.4% to $30.10 per barrel and West Texas Intermediate down 4.4% to $26.28 per barrel.

In economic data, RICS UK house price balance held steady at +49% in January, slightly below expectations of +52%. “The pronounced imbalance between housing demand and active supply continues to point to rapid gains in house prices,” said Samuel Tombs, chief UK economist at Pantheon Macroeconomics.

The US Labor Department revealed initial jobless claims fell to 269,000 in the week to 6 February from 285,000 in the previous week, less than the 280,000 claims forecast.

On the company front, Rio Tinto’s shares fell after reporting a 27% drop in full year revenue, hurt by falling commodities prices.

Shire advanced after reporting better-than-expected fourth quarter sales and issued a stronger guidance for 2016.

Randgold Resources and Fresnillo jumped as the price of gold rose 4.63% to $1,252,50 per ounce and silver increased 3.13% to $15.76 per ounce.

Centrica slid after the company said it will cut gas prices for customers by 5.1%.

Glencore was sitting lower after agreeing a $500m gold and silver streaming deal from its Antapaccay mine in Peru to help ease its balance sheet woes.

Tate & Lyle declined after reporting lower margins and continuing difficulties in the ethanol market in the third quarter.

DCC rallied after saying operating profit in the third quarter to the end of December was “very significantly ahead” of the previous year, with excellent growth in the energy, healthcare and environment units.

Workspace gained after announcing the disposal of five light industrial buildings for £64m, a 12% premium to the September 2015 valuation.

Market Movers

FTSE 100 (UKX) 5,548.92 -2.18%
FTSE 250 (MCX) 15,214.60 -1.92%
techMARK (TASX) 2,878.76 -2.00%

FTSE 100 - Risers

Randgold Resources Ltd. (RRS) 6,130.00p 7.54%
Fresnillo (FRES) 875.00p 5.42%
DCC (DCC) 5,225.00p 4.19%
Imperial Brands (IMB) 3,587.50p 1.96%
Rolls-Royce Holdings (RR.) 533.00p 0.95%
Sky (SKY) 976.00p -0.05%
British American Tobacco (BATS) 3,687.00p -0.15%
SABMiller (SAB) 4,133.00p -0.41%
AstraZeneca (AZN) 3,991.00p -0.45%
Sports Direct International (SPD) 374.00p -0.48%

FTSE 100 - Fallers

Aberdeen Asset Management (ADN) 208.80p -7.61%
Prudential (PRU) 1,087.00p -7.53%
Barclays (BARC) 147.85p -7.01%
Glencore (GLEN) 87.68p -6.22%
BP (BP.) 310.25p -6.01%
Standard Life (SL.) 324.70p -5.83%
International Consolidated Airlines Group SA (CDI) (IAG) 480.00p -5.33%
Berkeley Group Holdings (The) (BKG) 3,016.00p -5.22%
St James's Place (STJ) 801.00p -5.09%
Hargreaves Lansdown (HL.) 1,108.00p -4.73%

FTSE 250 - Risers

Centamin (DI) (CEY) 80.05p 6.03%
Acacia Mining (ACA) 247.00p 5.78%
Man Group (EMG) 152.90p 4.58%
Informa (INF) 616.50p 4.49%
Entertainment One Limited (ETO) 135.90p 4.14%
Allied Minds (ALM) 309.00p 3.00%
Cairn Energy (CNE) 140.30p 2.71%
Northgate (NTG) 336.70p 2.65%
Polymetal International (POLY) 618.00p 2.32%
Assura (AGR) 55.30p 1.84%

FTSE 250 - Fallers

AL Noor Hospitals Group (ANH) 843.00p -27.83%
Interserve (IRV) 365.00p -14.12%
Clarkson (CKN) 1,729.00p -7.98%
Amec Foster Wheeler (AMFW) 335.30p -7.83%
Atkins (WS) (ATK) 1,189.00p -7.69%
Tate & Lyle (TATE) 540.00p -7.14%
Henderson Group (HGG) 229.10p -7.06%
Crest Nicholson Holdings (CRST) 513.00p -6.39%
Vectura Group (VEC) 161.50p -6.27%
Jupiter Fund Management (JUP) 362.70p -6.25%