Markets plunge on poor US economic data

The FTSE 100 has slipped further into the red in late afternoon trading as disappointing US manufacturing and housing data added to growing concerns of stuttering global growth.

At 16.00, London's leading shares were down 2.12%, or 104 points, to 4,812.

Only beleaguered oil giant BP was in positive territory, up 4.75%, after a J P Morgan note highlighted its future value as a takeover target.

Financials are leading the dive into the red, with Schroders down 5.03% and Investec falling 4.87%.

Meanwhile, the Dow is down 1.37% to 9,639 as disappointing employment, home sales and manufacturing data add to fears global growth is slowing.

The Institute for Supply Management's ISM index for June fell to 56.2 from 59.7 in May.

On the housing front, the National Association of Realtors said its home sales index plunged 30% in May - far higher than economists' expectations of a 10.5% fall. The index rose 6% in April.

The Labor Department said initial jobless claims rose to 472,000 last week, despite predictions the number would shrink.

World First chief economist Jeremy Cook says: "Confidence in the ‘recovery story' is increasingly brittle at the moment and traders are slashing equity and US dollar positions ahead of US jobs data due Friday afternoon.

"All the precursors are pointing to a horrific payrolls figure and with speculators unwilling to run positions through the long US holiday weekend, we could see some real slaughter tomorrow."

The downward plunge mirrored falls throughout Europe with the French Cac 40 down more than 3% and the German Dax falling nearly 2%, as investors fret over the possible fallout of a ratings downgrade to Spain.

However, the euro climbed as modest take-up of the ECB's loan facility suggests European banks are better capitalised than feared. The single currency is up 1.93% against the dollar to $1.24730.

In Asia meanwhile, disappointing manufacturing data from China - which recently de-pegged its currency to the dollar - added to fears of a slowdown in growth.

Asian markets slipped overnight,with Japan's Nikkei down 2%, Hong Kong's Hang Seng 0.6% off and the Shanghai Composite 1% in the red.