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FTSE 100 drops as yuan fall hits markets | FTSE 100 drops as yuan fall hits markets |
(about 4 hours later) | |
The UK stock market was down 1% by lunchtime, with mining stocks bearing the brunt after a further fall in the Chinese yuan hit prices of metals. | |
After Tuesday's 1.9% devaluation, China's central bank cut the guiding rate for the yuan for a second day. | After Tuesday's 1.9% devaluation, China's central bank cut the guiding rate for the yuan for a second day. |
The fall in the yuan has hit commodity prices, driving down share prices in the big UK-listed mining companies. | |
The FTSE 100 was down 69.12 points at 6,595.42, with shares in mining giant Glencore falling 5.3%. | |
The losses were echoed across other major European stock markets, with Germany's Dax index and France's Cac 40 both down 2%. | |
Companies with direct exposure to China came under pressure. Shares in fashion house Burberry, for which China is an important market, fell 2.5%, having dropped more than 4% on Tuesday. | |
Shares in Unilever were down 3.5% after Goldman Sachs cut its rating on the consumer goods company to "sell" from "neutral". | |
Randgold Resources was the top riser in the FTSE 100, climbing 2.2%, after the price of gold rose. | |
Gold is traditionally seen as a safer asset in times of market turmoil, and the spot price of gold touched a three-week high of $1,119.80 an ounce on Wednesday morning before slipping back. | |
On the currency markets, the pound fell sharply against the euro after signs of a slowdown in UK wage increases pushed back market expectations of when interest rates might rise. | |
Latest figures from the Office for National Statistics showed unemployment rose slightly in the three months to June, while earnings growth - including bonuses - slowed to an annual rate of 2.4%. | |
The pound fell by 0.8%, more than one euro cent, against the euro to €1.3988 but edged up 0.06% against the dollar to $1.5582. |