Concerns over Turkish lira knock stocks

London’s blue chip index fell into the red as investors worried over whether a financial crisis in Turkey could spread across Europe.

The FTSE 100 ended the day down 0.3 per cent at 7642.45, as investors kept a close eye on Turkey, which has been rattled by a row with the US over its detention of an American evangelical pastor. That has compounded fears over the country’s high inflation, current account deficit and growing private sector debt.

The Turkish lira has already fallen nearly 50 per cent in the past year and was facing further pressure yesterday despite a pledge by Turkey’s central bank to provide liquidity to the country’s banks.

Michael Hewson, chief market analyst at CMC Markets, said: “While on its own this crisis may well seem contained, and small in nature, there does appear to be a sense that this was yet another reason for investors to take a step back.

“The bigger concern is that last week’s tariff escalation by the US could merely be the beginning of further measures to exert economic pressure on Turkey, which in turn could create further ripple-out effects.”

In currency markets, the pound was hovering at its lowest level since June 2017 as it traded nearly flat against the US dollar at $1.276. Against the euro, sterling was up around 0.1 per cent at €1.118.

The biggest risers on the FTSE 100 included Evraz, up 2.1 per cent at 520.6p, and Admiral Group, up 1.6 per cent at 2,019p.

The biggest fallers on the FTSE 100 included Tui, down 2.5 per cent at 1,526.5p, and Paddy Power Betfair, down 1.9 per cent at 7,120p.