FTSE 100 plunges back below 6,000 as China worries hammer European share prices

FTSE 100 index of leading shares closes 2.8% down
German and French markets also nurse 3.5% lossES; Wall St 1.6% in red
World markets spooked again by fear of China slowdown and commodity price slump

Published: 09:22 EST, 22 September 2015 | Updated: 13:05 EST, 22 September 2015

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The FTSE 100 index fell by 2.8 per cent to slump back below the 6,000 barrier today as worries over the Chinese economy sent European markets plunging.

Germany's DAX index was 3.6 per cent lower and France's CAC-40 3.4 per cent as mining, commodities and carmaker stocks suffered heavy falls. Traders feared that manufacturing data tomorrow will show further problems for China's economy and result in more oil and copper price falls.

It was this commodity price weakness that hit mining stocks in London today, with Glencore shares plunging 11 per cent and AngloAmerican and Antofagasta sliding 7 per cent.

Germany's Dax index fell 3 per cent as traders in Frankfurt sold off equities.

On the continent, shares in carmakers saw the biggest falls, as the fallout continued from Volkswagen's rigging of US car emissions tests.

The group admitted that 11 million vehicles worldwide are fitted with software to cheat emissions tests as it took a €6.5billion (£4.7billion) profit hit to deal with the scandal.

Shares in VW dived another 18 per cent, while rivals BMW and Daimler were both down more than 5 per cent. In France, shares in Renault dropped 5.6 per cent.

Disappointing figures for UK borrowing and a survey suggesting manufacturing growth has stalled added to the stock market woes in London, with the FTSE 100 closing down 172.87 points or 2.83 per cent at 5,935.84.

US shares also set off on a losing streak, with the Dow Jones Industrial Average sliding 273.6 points or 1.7 per cent to 16,236.6.

The stock market falls follow heavy declines on Friday after the US Federal Reserve decided not to raise interest rates, largely due to the concerns over the health of the global economy.

In London, sentiment was hurt further as official figures showed Britain's deficit spiralled to £12.1 billion last month, marking the widest August shortfall in government funding for three years.

The latest manufacturing survey from the CBI also showed activity in the sector stalled in September for the first time since early 2013.

The pound fell on the economic gloom, down a cent at $1.54 and nearly a cent lower at €1.38 euros.

The FTSE 100 raced to a record high of 7,122.74 points in late April but has since steadily lost ground, hit by concerns over an economic slowdown in China and the prospect of an interest rate rise soon in the United States.

Higher interest rates typically hurt stocks as they boost the appeal of bonds and cash by increasing returns on those assets.