UK shares slump to lowest level in over 2-1/2 years

“The initial reaction in the equity market was aggressive as many expected that this news would be out at the weekend”, Guardian Stockbrokers’ director of trading, Atif Latif, said.

Europe’s main stock markets opened down about 3% before recouping some of those losses in early morning trading.

The index, which marked its biggest weekly loss of the year on Friday, has now fallen for 10 sessions in a row, its longest continuous decline since 2003.

Five minutes after the opening bell, the FTSE lost 188 points, or 3%, to a low of 5,999, the first time it has been below the 6,000 level since January 2013.

China’s official state news agency called the day “Black Monday”, saying the sell-off is the worst since the Asian financial crisis.

After the Shanghai Composite, China’s benchmark index, lost all its gains made in 2015 by falling more than 8%, investors panicked about the future of the market. Investors has been hopeful that efforts from the Chinese government could stem the rout.

Hargreaves Lansdown senior analyst Laith Khalaf said: “It’s been a frightful fortnight for the Footsie, which has seen its losing streak stretch to nine consecutive days”. Hong Kong’s Hang Seng Index closed down 5.2% at 21,251.27, its lowest level since March a year ago.

In Europe, it proved impossible for any company to rise above the selling, with not a single member of the FTSE 100, the DAX or the CAC 40 in positive territory on Monday morning.

The mining sector led the fallers, dropping 9% to its lowest level since 2009 as fears around China’s growth continued to bludgeon commodity prices.

BHP Billiton also jumped about 6.8 percent despite reporting a 52-percent slump in annual profit to a decade low, as the world’s biggest miner said it would cut spending more deeply to shore up dividends.

“The phenomenal six-year bull market may finally meet its match in China-induced global deflation”.

As a result some analysts pushed back their expectations for an interest rate hike by the Federal Reserve.

“We always thought something would get in the way of the Fed raising rates in September and we’re perhaps seeing this now”, wrote Deutsche Bank’s Jim Reid.