FTSE hits three-month low

Miners and energy stocks were the worst hit members of Britain's sharply lower FTSE 100 index on Thursday, hit by heightened fears of a slowdown in global growth. The FTSE 100 ended down 98.61 points, or 1.7 percent, at 5,674.38, its lowest close since March 16 when markets were plunging in the immediate aftermath of the Japanese earthquake.
Miners and integrated oil stocks lopped a hefty 49 points off the index after data showed China's factory-sector growth was close to stalling in June. Energy stocks were also hammered by a steep drop in the price of oil, with US crude off $4.34 at $91.07, after the International Energy Agency said it would release 60 million barrels of oil from strategic government stockpiles in a bid to push down oil prices.
Against this backdrop of plummeting oil prices, British Airways-owner International Airlines Group and cruise ship operator Carnival headed a short list of blue chip risers, up 0.8 percent and 0.7 percent respectively. Investors were also forced to stomach weak data on the US labour market, with jobless claims rising more than expected - a day after Federal Reserve Chairman Ben Bernanke gave a more downbeat outlook on the economy, lowering the forecast for US growth.
US blue chips were down 1.5 percent by London's close, while the Standard & Poor's 500 Index shed 1.4 percent, hovering dangerously near its 200-day moving average - a break below which traders said could be a bearish signal. Europe's debt crisis pressured banks, despite investor relief earlier in the week that the Greek government got the backing it needed in a key confidence vote.
"You would have thought that after the voting in Greece a couple of days ago you would have had more legs to the upside, but I think traders are still very nervy because Greece has basically just about got over one hurdle but has plenty more to come across," Manoj Ladwa, senior trader at ETX Capital, said.
"There seems to be very little in the way of conviction buying and I think that traders are using any rally in the markets as an excuse to close out of existing long positions or to go short." Greece's new finance minister sought to explain gaps in his austerity plan to EU and IMF officials on Thursday, with European leaders insisting on deep spending cuts and tax hikes if Athens wants to secure funds and avoid potential default.
"European sovereign debt continues to hang over sentiment, but the daily economic news is doing little to counter balance this today," David Jones, chief market strategist at IG Index, said. "If the major indices move to fresh lows for the year once again over the next couple of days, it could well tempt more to throw in the towel for a poor performance so far this year for stocks."
In spite of the economic uncertainty washing through markets, a Reuters poll showed Britain's top share index is expected to rise to 6,150 by year-end and extend these gains by mid-2012, as investors focus on strong corporate balance sheets. Among individual movers, energy supplier Centrica dropped 2.1 percent after gains in the previous session inspired by vague bid rumours, after the firm said Britain's first new nuclear plant, scheduled for early 2018, will be delayed. BSkyB firmed 0.5 percent after British regulator Ofcom delivered its report on News Corp's proposed $14 billion acquisition of the satellite broadcaster to the UK government, bringing the deal nearer to completion.