London midday: FTSE 100 drops another 1.8% as sell-off resumes

In spite of an initial 'dead cat bounce' in early deals, London's FTSE 100 tanked again on Thursday morning with the index sinking to levels not seen since June 2013

The UK benchmark index was down 1.8% at 6,099 by lunchtime, having earlier touched a high of 6,282.95, with banking shares sinking sharply and oil majors tracking crude prices lower. Shire meanwhile was extending losses Abbvie recommended investors to vote against its $54bn takeover.

The FTSE 100 plunged 2.8% to a 15-month low of 6,211.64 on Wednesday as concerns about global growth, a 'flash crash' in US Treasury yields and soaring bond yields in the European periphery prompted investors to run for cover.

Extreme positioning in US dollars and a lack of clarity around the Federal Reserve's communications were cited by some observers as additional factors which may have accentuated the recent volatility.

"Not since perhaps the summer of 2011 has a spike in volatility rattled investors so much, and the breadth of asset classes that are affected is leaving little stone unturned," said analyst Will Hedden from IG. "The moves in major government bond markets yesterday were nothing short of spectacular, with a flight to safety prevalent."

The yield on the 10-year benchmark US Treasury was down a further 16 basis points (bp) at 1.98% on Thursday morning, after falling as low as 1.86% the previous session, the lowest since May 2013. Elsewhere, bond yields in Greece and Spain surged 114bp and 29bp, respectively.

US economic data will be in focus again on Thursday after retail-sales figures and New York manufacturing disappointed the previous session. Jobless claims, industrial production, nationwide housing numbers and Philadelphia manufacturing data are all on the calendar, as well as speeches from key officials at the Federal Reserve.

Meanwhile, concerns about the spread of Ebola were continuing to hamper sentiment after the news of a second Texas nurse being allowed on a domestic flight with a commercial airline despite contracting the virus.

Shire, banks, oil producers provide a drag

Shire, the pharmaceutical stock which dropped 22% on Wednesday after Abbvie said it was reconsidering its bid for the firm, was down at further 9% after the US group advised shareholders vote against the takeover due to changes in the US tax law. Abbvie said that these changes had introduced "an unacceptable level of uncertainty" to the deal.

Banking peers RBS, Barclays, Lloyds, HSBC and Standard Chartered were also weighing on the blue-chip index.

Oil stocks were lower as West Texas Intermediate crude neared $80 a barrel, falling 2%, while Brent crude dropped 1.3% to a four-year low of $82.72 a barrel. Tullow Oil, Shell, BP, Afren and Enquest were all registering sharp declines.

Quarterly updates from BSkyB, Mondi and Diageo failed to impress in morning trade with all three stocks falling into the red.

However, distribution and outsourcing firm Bunzl was higher as its reported that third-quarter revenue increased 6% on a constant exchange rate basis as acquisitions came on stream.

Market Movers
techMARK 2,538.09 -1.89%
FTSE 100 6,099.22 -1.81%
FTSE 250 14,242.47 -1.28%

FTSE 100 - Risers
Fresnillo (FRES) 811.50p +2.20%
International Consolidated Airlines Group SA (CDI) (IAG) 332.70p +1.40%
Petrofac Ltd. (PFC) 974.50p +0.93%
Randgold Resources Ltd. (RRS) 4,360.00p +0.88%
Meggitt (MGGT) 427.00p +0.73%
Bunzl (BNZL) 1,529.00p +0.66%
Hammerson (HMSO) 546.00p +0.46%
Johnson Matthey (JMAT) 2,810.00p +0.39%
Antofagasta (ANTO) 667.50p +0.23%
SSE (SSE) 1,482.00p +0.20%

FTSE 100 - Fallers
Shire Plc (SHP) 3,633.00p -9.45%
Aviva (AV.) 468.60p -3.72%
Tullow Oil (TLW) 476.00p -3.68%
Royal Bank of Scotland Group (RBS) 330.40p -3.45%
Royal Dutch Shell 'B' (RDSB) 2,123.00p -3.43%
Smith & Nephew (SN.) 890.00p -3.42%
Vodafone Group (VOD) 180.30p -3.22%
Royal Dutch Shell 'A' (RDSA) 2,050.00p -3.03%
Barclays (BARC) 205.80p -3.02%
Legal & General Group (LGEN) 210.00p -3.00%

FTSE 250 - Risers
Man Group (EMG) 114.00p +5.26%
WH Smith (SMWH) 1,025.00p +2.96%
Bwin.party Digital Entertainment (BPTY) 84.75p +2.60%
JD Sports Fashion (JD.) 429.30p +2.19%
AO World (AO.) 171.20p +2.09%
Zoopla Property Group (WI) (ZPLA) 200.80p +1.93%
Booker Group (BOK) 118.90p +1.28%
Bellway (BWY) 1,608.00p +1.13%
Renishaw (RSW) 1,563.00p +0.97%
Rightmove (RMV) 2,015.00p +0.90%

FTSE 250 - Fallers
EnQuest (ENQ) 71.40p -7.63%
Saga (SAGA) 146.10p -7.12%
Just Retirement Group (JRG) 118.00p -5.07%
Afren (AFR) 93.50p -4.88%
Foxtons Group (FOXT) 191.20p -4.40%
Michael Page International (MPI) 361.50p -4.37%
Ophir Energy (OPHR) 179.90p -4.31%
Close Brothers Group (CBG) 1,307.00p -4.25%
Vedanta Resources (VED) 790.50p -4.12%
NMC Health (NMC) 471.30p -4.01%