Recession fears see markets slump

Global recession fears sparked by woeful economic data from Japan, China and the United States have seen world markets retreat.

The FTSE 100 Index closed 33.8 points lower at 5854.6 after Chinese manufacturing and Japanese trade figures were followed by a smaller-than-expected drop in jobless benefit claims in the US.

Miners were the worst hit in London after the Japanese data revealed the country's export sector continued to suffer the effects of a slowdown in the eurozone, while there was also another month of contraction among Chinese manufacturers.

The pound was down against the US dollar at 1.61 as fears for the global economy boosted the greenback, which is seen as a safe-haven investment. Sterling was up against the euro at 1.25.

Figures from the CBI showing signs of an improvement for Britain's manufacturing sector this month offered little respite for the FTSE 100, which had opened on the back foot after key Asian markets dropped by around 1% overnight.

And a better-than-expected reading on the Philadelphia Fed Business Index in America - which rose to minus 1.9 in September from minus 7.1 the previous month - did little to cheer the markets on either side of the Atlantic.

Concerns over the impact of a global slowdown on demand left miners nursing heavy losses, with Evraz dropping by 6%, off 16.7p to 260.8p, Anglo American declining by 90p to 1944p and Vedanta Resources down 26p to 1054p.

On a shortened list of FTSE 100 risers, BSkyB made gains after it was told by regulator Ofcom that it remained "fit and proper" to hold a broadcasting licence, despite the phone hacking scandal at a newspaper owned by major shareholder News Corporation. Shares were 7p higher at 734p, a rise of 1%.

Lambert & Butler maker Imperial Tobacco topped the FTSE 100, up 3%, or 63p, to 2399p, as it shrugged off a disappointing update that revealed the group was suffering from trade sanctions against conflict-torn Syria and sales weakness in Ukraine and Poland.

Bristol-based Imperial expects sales volumes to fall by up to 3% in the year to September 30, but analysts said stronger performances in higher-margin regions should offset the sales pressure.