Global gloom wipes 2.4% off Footsie

LONDON FTSE 100 CLOSE 5,245.21 -131.20

Miners and banking stocks bore the brunt of yesterday's sell-off as investors digested gloomy news from central banks on either side of the Atlantic and slowing industrial growth in China.

Lloyds Banking Group fell by 5.1p to 70p, while miner Kazakhmys ended the day down 73p at 1,168p.

Standard Life shares were lower despite a 10 per cent rise in half-year operating profits and a 4.8 per cent increase in its half-year dividend. The figures were in line with expectations, but some analysts said the pay-out to shareholders came in short of estimates, prompting the shares to fall 7.8p to 208.6p.

Prudential, which is due to round off a decent results season for the sector with a rise in its half-year dividend today, fell 20.5p to 562p.

The FTSE 100 hit a three-week closing low of 5,245.21, down 131.2 points or 2.4 per cent.

Michael Hewson, analyst at CMC Markets, said: "Equity markets continue to sink lower on the back of concern about economic recovery prospects in western economies.

"Fears of a continued slowdown in China, along with the Fed's downbeat assessment of the US economic outlook - and this morning's similar statement from the Bank of England - have seen the markets adopt a 'risk off' strategy and book profits from the recent range highs."

A shortened risers' board featured a number of defensive stocks as investors dived for cover amid the economic uncertainty. The risers included Smiths Group, which climbed for a second session amid speculation that the airport security scanners and medical devices firm could be in line for a break-up. Smiths shares jumped 4 per cent or 45p to 1,193p.

Will Hedden, sales trader at IG Index, noted: "Talk of a break-up sent engineering company Smiths Group to the top of the UK's blue-chip index, as shareholders look set to benefit from a flurry of merger and acquisition activity.

"At the other end of the table, a number of big names - including Barclays, BT Group, Standard Chartered, Unilever and Rio Tinto - all went ex-dividend, adding to pressure on the index."

The session saw more turbulence for holiday companies after Thomas Cook said profits would be at the lower end of market hopes. Its shares fell 3.7p to 180.2p in the FTSE 250 Index while Thomson owner TUI Travel dropped a further 13.1p to 190p after issuing a similar warning on Tuesday.

Building giant Balfour Beatty fell 3.8p to 259.1p despite a rise in its order book to 14.6 billion in the first half of 2010.

It suffered a fall in sales at its construction division, but a clampdown on costs helped underlying pre-tax profits across the group jump 32 per cent to 141 million during the period.

Meanwhile, building services firm Rok plummeted 45 per cent - down 13p to 16p - after it said it had uncovered "serious failings" in financial controls at its plumbing and heating division. The problems will hit profits this year.