Almost £50bn has been wiped off the value of the FTSE as the EU president warned the eurozone crisis is spreading.The listing for the UK’s top 100 companies closed at 5393, down 191 points or 3.43%, taking £49.8bn from its value.It is the biggest fall on the FTSE for more than two years.
Since last Friday morning, £124.97bn, or 8.17%, has been wiped off the value of the FTSE 100.
The biggest fallers were Inmarsat, down 19.3%, Lloyds Banking Group down 10.19% and Vedanta down 9.39%.
The Dow Jones in the US was down 3% in early trading. The Cac40 in France closed almost 4% down, Germany’s Dax fell 3.4% and Italy’s main index was down more than 5.1%.
Gold rallied before dropping nearly 1% – a swing of nearly $43 in New York.
“Even gold is susceptible. People are pretty much getting out of everything, except cash and bonds,” head trader and strategist at Kingsview Financial Matt Zeman said.
The falls come amid concern about American debt and the state of the eurozone countries as investors seek safe havens for assets.
In a letter to European Union leaders, Jose Manuel Barroso said: “Whatever the factors behind the lack of success, it is clear that we are no longer managing a crisis just in the euro area periphery.”
He called for a re-assessment of all elements of the eurozone’s current and future bailout funds.
And he told them the eurozone needs to convince markets that it can respond to the debt crisis.
There are concerns about the Spanish and Italian economies.
Speaking on Sky News, the chief executive of the Centre for Economics and Business Research (CEBR) Doug McWilliams said: “(Italian Prime Minister Silvio) Berlusconi hasn’t solved the problem of the Italian economy, which has now become uncompetitive with the Euro.”
Greece has already been bailed out twice by the eurozone countries and Ireland has also required extra money to help rescue its precarious financial situation.
The CEBR said that, with Italy’s economy being twice as big as Greece, Portugal and the Ireland combined, a bailout may be unaffordable for the eurozone.
Sky business reporter Tadhg Enright said investors are concerned about the dwindling global economic recovery: “We saw earlier this week crisis just barely averted when a looming default by the US government on its debt was averted.
“But that shone a spotlight on the state of its economy, growth in the second quarter of the year was far less than expectations.”