FTSE 100 falls 2.6% amid global sell-off
- 4 January 2016
- From the section Business
(Close): UK shares fell sharply in the first trading session of the new year, as European markets dropped in the wake of steep losses in China.
The FTSE 100 index was down 161.83 points, or 2.6%, at 6,080.49.
Earlier in Asia, trading in China had been suspended after markets fell 7%, triggering new "circuit breakers" designed to limit volatility.
One factor cited for the sharp falls was another weak survey of China's manufacturing sector.
The Caixin/Markit manufacturing purchasing managers' index (PMI) slipped to 48.2 in December, marking the 10th consecutive month of shrinking factory activity in China. A figure below 50 indicates contraction.
"This swift return to the 2015 template of worrying about China looks to have been the trigger for the sell-off in Chinese equities," said Alastair McCaig, market analyst at IG.
Confidence among investors was also hit by worries over rising tensions in the Middle East, with Saudi Arabia breaking off diplomatic ties with Iran.