China and Italy send FTSE 100 into the red

Jitters over new bank capital rules in China and worries over Italy’s relations with Brussels sent European stocks into the red yesterday.

The FTSE 100 was down more than 1.1% or 85.21 points at 7,233.33, faring just mildly better than peers like the French CAC 40 and German Dax, which ended the day down 1.1% and 1.3%, respectively.

It comes after Chinese authorities cut the amount of cash cushion required to be held by its banks in a bid to support the national economy.

It was the fourth time China has cut its reserve required ratio (RRR) this year.

David Madden, a market analyst at CMC Markets UK, said: “The move is viewed as a sign of weakness and dealers are fearful the Chinese economy is cooling at a quick rate and needs support.”

Traders were also watching as the yield on Italian government debt hit its highest level in over four years, signalling greater risk on investments.

Mr Madden said: “Matteo Salvini, the joint deputy prime minister, confirmed the country will not be dropping the euro, but he asked that the ratings agencies be fair when assessing Italy’s credit worthiness.”

The pound was mixed, trading up by 0.6% against the euro at 1.137 but falling 0.5% versus the US dollar to trade around 1.305. The biggest risers on the FTSE 100 were Next up 84p at 5,424p, Smurfit Kappa Group up 44p at 2,860p, Segro up 9p at 618.4p, and Centrica up 1.5p at 152p. The biggest fallers included Melrose down 10.45p at 181.3p, Ashtead Group down 121p at 2,181p, Halma down 68p at 1,368p, and Rolls-Royce Holdings down 38.2p at 922p.