FTSE100: 6,417.16 -130.64 (-2%)
Markets slump worldwide as oil tumbles to new low
Mon markets (close): Brent crude fell further, to $53 a barrel, after hitting a fresh five-and-a-half-year low on Friday on the back of record supplies from Iraq and Russia.
Markets were in freefall, with more than 2% wiped off the index of leading London shares and other markets joining the sell-off.
A glut of oil has now led to a 55% fall in the price since June when it stood as high as $117. A return to that level has been discounted for the whole of this year by analysts who believe a period of lower prices is the new normal.
The continued fall – there were forecasts before Christmas that it could fall to $40 – will add to nerves already being felt in the North Sea where jobs are expected to lost and production mothballed.
Oil companies obviously suffered the brunt of the sell-off and sparked concerns over other energy and oil-linked stocks.
BP fell 20.75p (-5.06%) to 389.7p, not helped by the weakness in the value of the rouble which will hit its fourth-quarter results. Weir Group, the Glasgow-based engineer, topped the fallers, down 119p at 1,764p (-6.32%).
Mining stocks were also down as copper prices fell for a third day. Copper hit its lowest in over four years the previous session.
The positive news is that the wider economy will benefit from lower energy costs. Motorists are looking forward to cheaper petrol which is close to falling below £1 a litre.
Travel companies were continuing to benefit from the fall in oil prices with Carnival, IAG and EasyJet among the best performers among the FTSE100 stocks.
Separately the euro slumped to a nine-year low against the dollar as Berlin worries that a programme of QE would discourage struggling nations to reform.
Department store chain Marks & Spencer was trading in the red after analysts at Societe Generale downgraded their recommendation for the stock from ‘buy’ to ‘hold’.
Shares in Rangers International rose 15.56% to 26p on speculation that US financier Robert Sarver may launch a takeover bid for the club.