FTSE 100 recovery gains wiped out as stocks slide into the red
The FTSE 100 failed to hold on to its early gains on Friday, sliding back into the red.
The index was down 11.02 points, or 0.16%, at 6,995.91.
Top-flight stocks had moved back into positive territory earlier in the day as global stock markets tentatively recovered from a widespread sell-off.
A day earlier, the FTSE 100 suffered its largest one-day drop since June after falling 1.9%.
Neil Wilson, of Markets.com, had warned earlier on Friday that sentiment was still “fragile” and markets could be in for a “dead cat bounce”: a short-lived recovery after a substantial fall.
European stocks experienced a similar reversal following an initial recovery. The French Cac was down 0.14% and the German Dax was down 0.13%.
Investors have been heading for the exit on concerns over rising US bond yields, with America’s massive borrowing looking vulnerable given the costs of servicing the debt.
Markets have also been jittery over mounting trade tensions between the US and China, which could hit global demand.
“Traders are keen to square up their books ahead of the weekend,” said CMC Markets UK market analyst David Madden.
“The global equity rout originated in the US, and the moves continue to be US driven, and European dealers are keen to cash in their holdings as Wall Street still has several hours more trading left. ”
Shares in Aim-listed Patisserie Holdings are still suspended but the company has put forward a rescue plan which will involve chairman Luke Johnson stumping up loans of as much as £20 million.
The company also hopes to raise £15 million by issuing new shares.
Shares in Sports Direct were trading 1.58% higher after the company announced it had bought the freehold of the Frasers store in Glasgow for £95 million.
In currency markets, the pound was lower by 0.5% against the US dollar at 1.316 and dropped 0.28% versus the euro to 1.380.
Hopes that the UK and EU could announce a Brexit deal imminently lifted sterling earlier in the week, but concerns had begun to re-emerge by Friday. The pound also suffered from a rise in the dollar.
Meanwhile, the euro could face more volatility on the horizon after Italy passed a new budget bill.
Fiona Cincooa, senior market analyst at City Index, said: “The proposed legislation will still need to be approved by the government and then it will head to the European Commission on Monday where it is likely to face a non, nein and no as it remains in breach of the EU debt target. The euro could face more volatility next week as the saga plays out.”
Brent crude prices were also lower, down 0.3% at 80.06 US dollars (£60.84) per barrel.
The biggest risers on the FTSE 100 were Scottish Mortgage Investment Trust, up 26.6p to 481p, Barratt Developments up 26p to 513.8p, Fresnillo up 37.4p to 876.4p, and Ocado Group up 33.8p to 813.2p.
The biggest fallers on the FTSE 100 were Imperial Brands, down 161.5p to 2,516.5p, British American Tobacco down 133p to 3,272p, United Utilities Group down 17p to 687.4p, and Hargreaves Lansdown down 44p to 1,806.5p.