The sell-off on the London market eased as traders digested the Federal Reserve’s decision to trim its money-printing programme, despite drinks giant Diageo providing further evidence of emerging market weakness.
As disappointing manufacturing figures from China confirmed fears that the Asian giant is cooling off, the FTSE 100 Index slipped 5.83 points to 6,538.45. It follows a week of woes for global equities after a currency crisis in Argentina spread across the developing world.
David Madden, market analyst at IG, said: “The South African rand managed to claw back the ground it lost yesterday, but a sense of fear is still hanging over the currency.
“We might be in the middle of a ceasefire but the currency war is far from over.”
Diageo shares provided the biggest fall of the session after the Johnnie Walker and Smirnoff maker said sales growth in emerging markets had slowed in the half year. It fell 90p to 1,820p, a drop of almost 5 per cent. Rival drinks firm SABMiller, which is also a big player in emerging markets, was down 48.5p at 2,753p.
Other stocks with a sales focus on Asia also fell, with Rolls-Royce down 19p at 1,039p, Prudential off 4p at 1,240p and Burberry 41p lower at 1,411p.
In a busy session for corporate results, broadcaster BSkyB jumped 4 per cent after it reported a surge in the take-up of products over its Christmas quarter. Shares rose 33.5p to 878p, despite a hit to profits from higher sports rights costs.
Outside the top flight, shares in Serco slumped 17 per cent after the troubled outsourcing firm issued another profits warning.
Shares were down 86.3p to 423.2p, while blue chip rival G4S was 9.2p lower at 237.7p.