POLITICAL turmoil in Portugal and concerns over the strength of the Chinese economy conspired to hit investor confidence yesterday.
Billions of pounds was wiped from the value of Britain’s biggest companies as sentiment was also dealt a blow by the continuing turmoil in Egypt.
The benchmark FTSE 100 index closed down 74.07 points or 1.2 per cent at 6,229.87, having hit a low of 6,185.2 earlier in the session. In France, the Cac-40 index tumbled 1.1 per cent while Germany’s Dax fell by 1 per cent. Robust US jobs data helped stem the losses.
The retreat eliminated some of the rebound seen in recent days after earlier losses triggered by credit crunch fears in China and the prospect of a tapering of economic stimulus measures in the United States.
Investors were spooked yesterday by growing concerns over the future of Portugal’s coalition government as it attempts to pursue the austerity measures demanded by creditors.
The crisis in Egypt has also weighed on oil prices. While the country is not an oil producer, its control of the Suez canal – one of the world’s busiest shipping lanes – gives it a crucial role in global energy supplies. US crude hit a 14-month high of about $102 a barrel.
Michael Hewson, senior analyst at CMC Markets UK, said: “Better-than-expected [US employment data] hasn’t been enough to placate investor concerns about the knock on effects for further political turmoil in both Egypt and Portugal, as well as a slowdown in China.”