FTSE 100 dives into the red amid continued China fears
The FTSE 100 fell by up to 1 per cent in the opening hours, before recovering to a drop of 0.5 per cent, after closing down by 2.5 per cent yesterday.
The index of Britain's largest companies is now hovering at 5928, close to the lows seen in August when stock markets crashed in a 'Black Monday' day of trading.
It comes after Asian markets also fell on Tuesday, with the Shanghai Composite Index closing down by 2 per cent and Japan's Nikkei index falling by 4.05 per cent.
However, London's mining sector today staged a partial recovery after taking heavy hits on Monday, with Anglo American, Rio Tinto and Glencore back up in morning trading.
Concerns over China's slowing economy are largely responsible for the collapse in commodity prices that is having a continued impact on large mining companies.The FTSE350 mining index yesterday hit levels last seen at the end of 2008, according to Michael Hewson, chief market analyst at CMC Markets UK.
He said: "The latest gauge of industrial profits for Chinese companies showed an 8.8 per cent fall in August, and though some of that may have been due to the disruption caused by the Tianjin port explosion and the World War two commemorations, investors didn’t hang around to find out.
"It still remains far from clear how weak or otherwise economic conditions in China are, but the weakness of the manufacturing sector, remains a real concern."
He added: "A good number of miners racked up significant amounts of debt in the wake of the China and US stimulus splurge of 2008/2009 and with commodity prices cratering there is a fear that unless commodity prices rebound quite quickly at a time when the US looks set to pull the trigger on a rate rise, a lot could find themselves in big trouble."