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FTSE 100 slides as mining shares suffer



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(Close) The UK stock market fell sharply, together with other European markets, with mining firms suffering after commodity prices declined.

The FTSE 100 closed down 172.87 points, or 2.8%, to 5,935.84.

Mining shares led the falls after commodity prices continued to weaken. Copper prices hit two-week lows and oil prices dropped after rising on Monday.

Among mining firms, Glencore sank more than 10% while Anglo American was down 6.7%.

Commodity prices have been hit by the slowdown in the Chinese economy, which is a huge importer of raw materials.

Investors are also waiting for a survey, due to be released on Wednesday, that will provide the latest snapshot of the health of China's manufacturing sector.

Oil prices also fell, reversing some of the gains seen on Monday. The price of Brent crude was down 64 cents at $48.28 a barrel, having dropped below $48 earlier.

"Until China demand and emerging market currencies find a floor, it will remain challenging to put an absolute floor on commodity prices," said analysts at Credit Suisse.

Carmakers suffer

Big falls were also seen across other European markets, with Germany's Dax index down 3.8% and France's Cac 40 index dropping 3.4%.

Shares in carmakers saw the biggest falls, as the fallout continued from Volkswagen's rigging of US car emissions tests.

Shares in VW dived another 20%, while rivals BMW and Daimler were both down more than 5%. In France, shares in Renault dropped 7%.

Back in London, shares in the AA fell 13% after it said half-year revenues dipped 1.4% to £485m after income from its insurance business declined.

The AA also warned that the planned rise in insurance premium tax, due in November, was likely to affect trading in both its insurance and roadside assistance businesses.

Also in the FTSE 250, shares in Irn-Bru maker AG Barr fell 5.7% after it reported an 11.3% drop in half-year pre-tax profits to £16.9m, following "an extremely demanding six months".

The company said trading had been hit by increasing competition and by the recent poor weather, although it expects full-year profits to be "broadly" the same as last year.

On the currency markets, the pound fell 0.95% against the dollar to $1.536, and dropped 0.43% against the euro to €1.3793.