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FTSE kicks off 2016 with worst first-week since 2000

The index hit was down 4.3 percent on the week, the biggest weekly fall in a month.

A stock trader reflected in a market screen. Picture: AFP.
stocks,FTSE 100
World Business

LONDON – United Kingdom (UK) shares were on track for their biggest fall in the first week of a year since 2000 despite steadying on Friday, after Chinese stocks regained some poise following a plunge the previous day that rattled global markets.

Strong United States (US) jobs data also supported the market, with the blue-chip FTSE 100 index .FTSE up 0.2 at 5,969.85 points by 1454 GMT. The index hit a three-week low on Thursday, when 33 billion pounds was wiped off its market capitalisation as stocks in China sank and Beijing allowed the biggest fall in the yuan in five months.

The index was set for its worst first week of the year since 2000, down 4.3 percent on the week, the biggest weekly fall in a month and not far off the weekly slump seen last August, when China also allowed its currency to weaken, similarly roiling stock markets.

Some investor calm was restored, however, after Beijing suspended a circuit-breaker on its stock market that had stoked volatility rather than stemming it.

“A turbulent start to 2016 has seen investors adopting the brace position, as a combination of factors have driven global markets lower,” Richard Hunter, Head of Equities, Hargreaves Lansdown Stockbrokers, said in a note.

“With the Chinese deciding that the idea of a circuit breaker is broken... some stability returned to Asian markets overnight and London in turn.”

The FTSE 100 index spiked higher following a surge in US job growth and sharp revisions higher to employment in the previous two months. However, the index drifted back to pre-data levels, with some traders expressing concern about a lack of wage growth.

The stand out individual stock mover was Sports Direct (SPD.L), Britain’s biggest sportswear retailer, which dropped 14.8 percent after it warned on full-year profit.

“We are confused by the warning... This feels like a clearing of decks exercise, but we need to shed more light on some key issues,” analysts at Jefferies said in a note, adding it was putting its “buy” rating on the stock under review.

Rising to the top of the British blue-chips was grocer Tesco (TSCO.L), gaining 6 percent on the back of a broker upgrade by Barclays.

Also benefiting from an upgrade was engineering company GKN (GKN.L), which rose 5.4 percent after Bank of America Merrill Lynch raised its rating to “buy” from “underperform”.

Mining stocks .FTNMX1770 gave back early gains as copper turned lower, with the sector touching its lowest level in more than 11 years.

Oil shares were also in negative territory, with Royal Dutch Shell (RDSa.L) and BP (BP.L) retreating 3.2 percent and 2.2 percent respectively as concerns over a global crude glut continued to weigh on the price of oil.

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