Markets: Shares slump as traders rein in risk

Rebecca O’Keeffe, head of investment at Interactive Investor, said there was “a sea of red across global markets” as investors took money off the table.

“The impact on smaller companies was even more pronounced as fear drove investors to sell,” she added. “With the stock market having risen so much over the last five months, it is perhaps no surprise that investors are trigger happy on the sale side.”

Xcite Energy, the Aberdeenshire-based oil explorer popular with small investors, fell 7 per cent to 122p in the market backlash.

The FTSE 100 index shed nearly 2 per cent or 109.02 points to 5,765.8 as Brazil became the latest major economy to disappoint. Its relatively subdued GDP growth of 2.7 per cent last year follows a downgrade to China’s expectations on Monday.

Renewed fears of a worldwide slowdown hit resources-based stocks with Chilean miner Antofagasta down 55p at 1,345p and Evraz off 25.2p to 380p. Engineering firm Weir Group, which supplies the resources industries, continued its run of losses, down 16p at 1,923p.

Banks sold off on rumours – swiftly denied by officials – that Greece may seek to extend its 8 March deadline to convince its private creditors to take part in a bond swap. Barclays was off 14p at 238.9p, Royal Bank of Scotland dropped 1.21p to 26.2p, and Lloyds saw a 1.4p fall at 34.16p.

Fund manager Hargreaves Lansdown was one of only two risers in the top flight, with its hopes of survival in this week’s FTSE 100 reshuffle boosted by a rally of 13.8p to 459.1p.

In New York, the Dow dropped more than 200 points, handing Wall Street its worst day in almost three months on renewed fears of a disorderly default in Greece and concerns China’s slowdown would hit global growth.

The Dow Jones industrial average was down 204.57 points, or 1.58 per cent, at 12,758.24. The Standard & Poor’s 500 index was down 20.94 points, or 1.53 per cent, at 1,343.39. The Nasdaq Composite index was down 40.25 points, or 1.36 per cent, at 2,910.23.