Britain's top shares slid on Friday as investors shunned banks, miners and commodity stocks in favour of safe havens such as the dollar and yen, fearing eurozone debt problems will snuff out economic recovery. The FTSE 100 ended down 170.88 points, or 3.1 percent, at 5,262.85, having risen 0.9 percent to 5,433.73 on Thursday to hit its highest closing level since April 30.
The index is still up 2.7 percent this week, pulling back some of the 7.7 percent tumble seen last week. Friday's decline wiped 38.2 billion pounds ($55.7 billion) off the market value of Britain's leading companies. European authorities announced a massive debt safety net for Greece, Spain and Portugal this week, but investors remain sceptical about whether those countries can take the pain of overhauling their poor public finances.
"There's a bubbling cauldron of eurozone debt and we're not sure if its going to tipover and burn everyone's feet," said Andrew Bell, chief executive of Witan Investment Trust. Banks fell on concern over exposure to eurozone debt and speculation about measures the new UK coalition government may impose on banks as it tackles Britain's bulging deficit.
HSBC, Standard Chartered, Lloyds Banking Group, Barclays and Royal Bank of Scotland dropped 2.7 to 6.1 percent. Commodity-linked stocks slid as crude dropped below $72 a barrel and metals prices fell sharply, as eurozone growth prospects dulled the outlook for demand. Among energy companies BP, Royal Dutch Shell and BG Group were down 2.4-3.8 percent.
Miners Xstrata, Kazakhmys, Antofagasta and Rio Tinto fell 5.5 to 7.9 percent. The sector is around 17 percent off 2010 highs hit in late March amid concerns over potential China monetary tightening and eurozone debt issues. The initial optimism over moves this week to keep Greece's debt crisis from spreading ebbed on concerns the efforts won't be enough, and that plans to rein in national budgets could stifle growth. Deutsche Bank's chief executive, who helped to craft a private-sector bailout package for Greece, said he doubted Athens could repay its debt and said a $1 trillion eurozone rescue package would help stabilise Italy and Spain.
The jitters took the euro to an 18-month low against the dollar, while gold hit record highs before retreating. Wolseley was the only blue chip gainer, up 5 percent after the building materials distributor said it anticipates beating market expectations for the full year, prompting Seymour Pierce to raise its estimates.