The FTSE 100 index has dumped a little over 2% this morning as mining stocks including BHP Billiton and Anglo American dragged the market into down on falling metal prices.
At 9.39am the FTSE 100 Index had lost 123.10 points, or 2.16%, to 5583.20.
Anglo American, the world's second-largest mining company, has declined 4.3% to 1894p while larger rival BHP Billiton has lost 3.7% to 963.5p. Xstrata has also slumped 7.4% to 1789p.
Copper has fallen as much as 1.8% to $7,650 in London, leading declines of aluminum, nickel and zinc.
Gold is also trading near a six-week low in Asia on speculation the European Central Bank President Jean-Claude Trichet will today raise rates to curb inflation, eroding demand for the precious metal as an alternative to bonds.
Japanese stocks also tumbled overnight, sending the Nikkei 225 Stock Average down by the most in more than a year, after a fourth US Federal Reserve policy maker said inflation is a concern, signaling the central bank's readiness to raise borrowing costs again in the world's largest economy.
Exporters such as Toyota and Canon led the decline after a Fed survey showed growth in the US, Japan's largest overseas market, is slowing.
The Nikkei 225 fell 462.98 points, or 3.1%, to 14,633.03 at its close in Tokyo, dropping by the most since April 18, 2005, and finishing below 15,000 for the first time since November.
Toyota slumped 200 yen, or 3.4%, to 5,720. The world's largest car manufacturer had 60% of its sales outside Japan last fiscal year. Toyota has plunged 17% since April 21 when it reached a record.
Honda lost 260 yen, or 3.8% to 6,930. Japan's third-largest car manufacturer had 55% of its sales in North America in the year ending March 31, the highest percentage among Japan's three biggest car makers.
Canon slid 190 yen, or 2.5%, to 7,570. The world's largest seller of digital cameras generated almost 75% of its sales from overseas last year. Canon has tumbled 16% from a record set on May 2.
Sony Corp. fell 140 yen, or 2.8%, to 4,860. The world's second-biggest consumer electronics maker made about 70% of its sales outside Japan in the six months the end of September.
Energy-related shares such as Inpex Holdings and Japan Petroleum Exploration also slid after oil fell for a second day. Crude oil for July delivery dropped 2.3% to $70.82 a barrel in New York, in the biggest decline since the end of May.
Inpex, Japan's biggest oil explorer, lost 19,000 yen, or 2.%, to 888,000. Japan Petroleum, the country's second- biggest, slumped 360 yen, or 5.1%, to 6,670.
The drop came after comments by US President George W. Bush eased fears about a confrontation with Iran and an Energy Department report showed U.S. gasoline supplies rose for a sixth straight week.
In the US stocks fell to four-month lows, sending the Dow Jones Industrial Average below 11,000, as the prospect of slower economic growth hurt commodity producers.
The Dow industrial average fell 71.24 points, or 0.7%, to 10,930.90, a level not seen in almost four months and the first close below 11,000 since March.
Schlumberger, the biggest oilfield-services company, and Nucor, the second-largest US steel producer, led the retreat as prices for oil and metals dropped. DuPont and Dow Chemical declined as Deutsche Bank downgraded shares of the chemical makers on falling demand for plastics and paints.
Schlumberger fell $3.45 to $60.51. Exxon Mobil, the largest publicly traded oil company, declined $1.58 to $58.82.
Nucor dropped $3.48 to $47.92. Gold prices slumped to a six-week low on speculation that higher interest rates will lift bond yields and erode bullion's attractiveness as an alternative investment. Silver declined to the lowest in two months.
DuPont, the No. 3 US chemical maker, lost $1.08, or 2.6%, to $41.09 for the second-biggest drop in the Dow average. Dow Chemical, the top producer, fell 50 cents to $39.08.
But Target rallied $1.30 to $48.90. Target's full-year earnings per share should increase in the mid-teen percentage range, boosted by growth in its stores and credit-card business as well as continued stock buybacks, the company said in a regulatory filing.IFAonline
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