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FTSE 100 plunges to lowest level since December 2016

Graeme Evans, Business Reporter

A volatile week for world stock markets has ended with London's FTSE 100 Index sliding again by more than 1%.

The drop for the UK's blue-chip index on Friday comes on top of its 1.5% decline on Thursday, taking it below 7,100 to its lowest level since December 2016.

The FTSE saw a drop of nearly 5% over the week.

European indexes were also sharply down.

The Dow Jones Industrial Average suffered its second biggest fall in history on Thursday, with the decline of 1,032 points only surpassed by the drop of 1,175 witnessed on Monday.

This placed the index into what is known as the correction phase, when there is a drop of more than a tenth.

It see-sawed in early Friday trading, but surged again in the final hour and ended up 1.4%.

Meanwhile the oil price has been sliding too, with Brent crude slipping under $63 a barrel having topped $70 in January amid a broad recovery.

It has also been a tough session for the pound, which fell by a cent against both the dollar and the euro after EU chief negotiator Michel Barnier threw into doubt plans for a Brexit transition.

Despite this week's turbulence, global markets are still close to historically high levels.

Analysts have also pointed out that corrections of this kind are normal.

The US stock market began its current wobble last Friday after strong wages and jobs figures suggested inflation could increase and the Federal Reserve might raise interest rates faster than expected.

Scott Wren, senior global equity strategist for Wells Fargo Investment Institute, said: "Far and away the most important things are the fear that the Fed is going to make a mistake, and higher wages are going to cut into margins."

The Bank of England also spooked investors on Thursday by signalling that interest rates are likely to rise earlier and more sharply than previously thought.

In Asia this morning, Shanghai stocks plunged 4% while Japan's Nikkei Index fell 2.3% and the Hang Seng in Hong Kong dropped 3.1%