The FTSE100 slid in early trade on Monday on the back of worrying economic news from Asia, reports that a US congressional super-committee has reached deadlock over debt reduction plans and a lukewarm response to a change in Spain’s government.
The blue-chip index was down 2% to 5253.23 at 1036GMT. Resource stocks led the sell-off, with Petrofac the biggest faller, shedding 6.1% to 1307p. Fresnillo fell 5.2% to 1622p and Rio Tinto was down 4.6% amid as poor Asian economic data fuelled fears over demand for commodities.
Japan's Ministry of Finance revealed that exports fell by an annual rate of 3.7% last month, the first decline in three months, as shipments to China, the US and Europe weakened. Furthermore, with imports rising 18% due to increased energy prices, the nation registered a deficit of 2.738bn yen. Singapore's government expect that the nation could grow by just 1-3% in 2012, down from the 5%-expected growth in 2011.
Banking stocks were also hit by risk aversion as the election of a new prime minister in Spain failed to quell fears about its debt problem.
Within the sector, Lloyds banking group was the biggest laggards slumping 4.7% as it announced that non-executive director David Roberts will become interim boss if chief executive Antonio Horta-Osario remains on sick leave for longer than expected.
Insurance giant Resolution fell over 3% lower after confirming that talks regarding the possible acquisition of Phoenix Group have been terminated.
The general air of gloom meant that there was not a single FTSE100 constituent in positive territory at 1050GMT. Centrica provided relative cheer, although the shares weredown 0.21% to 288.1p after signing a deal with the Norwegian company Statoil to buy 13bn worth of gas over ten years. In a separate transaction, Centrica has also announced it is to buy some of Statoil's assets in the Norwegian sector of the North sea for £965m.
Meanwhile, the lack of any agreement in the US over the nation’s debt reduction problem is likely to weigh heavily when the market opens later.
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