Britain's top share index slipped to a one-year low on Friday and recorded its biggest weekly drop in nearly 16 months, with concerns over the outlook for global growth prompting investors to trim exposure to cyclical stocks. Mining and energy sectors took the most points off the FTSE 100 index following a sharp decline in commodity prices, while travel and leisure shares were hit by worries about the spread of Ebola.
The UK mining index fell 2.9 percent and the oil and gas index was down 2.4 percent, tracking sharp declines in major industrial metals and with crude oil prices hovering near a four-year low. Rio Tinto, BHP Billiton, Tullow Oil and Antofagasta fell between 2.9 and 3.7 percent.
Continuing worries that the spread of Ebola could hurt air travel and tourism sent the UK Travel and Leisure index down 0.9 percent, with TUI Travel and cruise operator Carnival falling 3.7 percent and 2.7 percent respectively. "Wherever you look globally, there doesn't seem to be any positive figures coming out," said Jonathan Roy, partner at Charles Hanover Investments.
"German worries have definitely been the catalyst. We're not taking a great deal of risk just now, however, looking at how things are panning out, if we do see some stabilisation here, there are definitely some bargains to be had in the next couple of weeks or so." The benchmark bluechip FTSE 100 index ended down 1.4 percent at 6,339.97 points after hitting a low of 6,328.39 earlier in the session. It fell 2.9 percent this week, the biggest weekly decline since June last year.
Recent economic figures from Germany, Europe's biggest economy, showed a plunge in exports and steep drops in industrial orders and output, the latest in a slew of weak data which prompted the IMF to downgrade global growth forecasts. "The economic cycle has stalled, European macroeconomic data is starting to slow and the US is in a hold position as investors continue to digest the tightening cycle and what it means for future growth prospects," H2O Markets' chief market strategist, Mike Jarman, said.
"The recent sell-off is a 'shaking of the tree' as investors prepare for the year-end and ready an eye for 2015. There is potentially another 2 percent decline in global markets before the next wave of buying comes in," Jarman added. However, some investors saw weaker stock prices as an opportunity to return to the market. Sanlam Securities head of execution trading, Mark Ward, said that his firm was a buyer at these levels. "The markets are now starting to hit the bottom ... we might still see the FTSE 50 to 60 points lower, but it does feel like it is now the time to start picking up some cheap stocks," he said.
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