Footsie hits 2½-year low as Barclays and BHP Billiton stocks plummet

FTSE: 5,092.23 (–239.37) Mid-250: 9,860.22 (–509.20) Small Cap: 2,941.61 (–62.74)

UK STOCKS fell the most since March 2009 yesterday, amid renewed concern that global growth is slowing.

HSBC tumbled 6 per cent to 509.6p and Barclays plunged 11 per cent to 154p leading declines yesterday on the FTSE 100, as the Wall Street Journalreported that US regulators will increase their scrutiny of Europe's largest lenders on concern that a debt crisis in the region may lead to a funding squeeze.

Rio Tinto declined 6.5 per cent to 3,494.5p as metal prices slumped amid concern that global economic growth is slowing. Xstrata and BHP Billiton, partners in the world’s biggest open-pit coal mine for exports, fell 10 per cent to 972p and 6.5 per cent to 1,890p, respectively.

The FTSE 100 Index slid 4.5 per cent in London.

The gauge has lost 14 per cent from the end of June, wiping more than $300 billion from the value of UK shares amid concern that Europe’s credit crisis and slowing US economic growth may derail the global recovery.

“Recession risk is the key call,” said Bill O’Neill, the London-based chief investment officer for Europe, Middle East and Africa at Bank of America’s Merrill Lynch Wealth Management.

“To some degree, there has been disappointment in terms of corporate activity, certainly in terms of jobs growth. We will see a weakening of growth close to stagnation in Europe in the second half of this year, but I don’t see a lurch into recession,” he said.

Morgan Stanley cut its forecast for global growth this year, citing an “insufficient” policy response to Europe’s sovereign-debt crisis, weaker confidence and the prospect of fiscal tightening.

The bank predicted growth of 3.9 per cent, down from a previous forecast of 4.2 per cent, according to an e-mailed report.

UK retail sales rose less in July than economists had forecast as demand at clothes and household-goods stores dropped.

Sales including fuel climbed 0.2 per cent from June, when they increased a revised 0.8 per cent, the Office for National Statistics said yesterday in London.

Cairn Energy was the biggest faller among the oils, down 8.7 per cent.

Commodity stocks whose performance is correlated to global growth were among the worst performers, tracking crude and base metal prices lower. – (Bloomberg/Reuters)