A stock market bloodbath saw £37 billion wiped off the FTSE 100 on Friday as a host of weak economic data pummelled shares.
London’s blue chip index closed down 147.72 points, or 2.01%, at 7,207.59 as problems in the eurozone, the unresolved US-China trade dispute and Brexit uncertainty conspired to spook traders.
Eurozone PMI data came in at the lowest level since 2014 and the manufacturing sectors in Germany and France, the two largest economies in Europe, experienced contraction.
“The updates underlined how fragile the eurozone is, and traders are worried about how the region would cope in the event of a no-deal Brexit,” said David Madden, market analyst at CMC.
Among a sea of red stocks, Sainsbury’s managed to eke out a small gain after the supermarket, along with Asda, offered to sell up to 150 stores as part of efforts to address competition concerns over their £12 billion merger.
The supermarkets also described the Competition and Markets Authority’s (CMA) provisional findings into the merger, which warned the deal could be blocked unless they sell off significant stores or even one of the brands, as “prohibition in all but name”.
Sainsbury’s shares were up 0.2p at 236.8p at the close.
In the lower tiers, Debenhams shares crumbled over 45%, or 1.31p, to end at 1.59p after a day of high drama involving Mike Ashley’s Sports Direct.
The tracksuit tycoon ramped up his efforts to gain control of Debenhams as the department store chain puts in motion plans to secure £200 million in new funding.
Crucially, the retailer also announced it will pursue a restructuring plan in a move which could wipe out existing shareholders, including the Sports Direct founder.
For its part, Sports Direct said it had offered to buy Debenhams’ Danish business, Magasin du Nord, for £100 million. The deal would see Mr Ashley become chief executive of Debenhams.
The pound, meanwhile, was trading higher as currency traders reacted positively to the likelihood of a lengthy Brexit delay and the prospect of Theresa May quitting next week.
Sterling was up 0.75% versus the US dollar at 1.320 at the London market close, while the British currency rose 1.5% against the euro to hit 1.169.
Fiona Cincotta, of City Index, said: “Sterling was back in the 1.32 US dollars region as a no-deal Brexit was successfully averted and amid growing expectations that Theresa May will have to resign next week if her deal doesn’t make it through Parliament on its third attempt.
“A resignation from Theresa May would almost certainly result in a long delay for Brexit, the prospect of which sent it bounding higher towards the weekend.”
Under the plan set out at the EU summit, leaders agreed to extend Brexit to May 22 if Mrs May can finally get MPs to back her deal in a third Commons “meaningful” vote.
However, if she fails the UK will have to set out an alternative way forward by April 12, which could mean a much longer delay.
In Europe, Germany’s DAX was down 1.61% and France’s CAC 40 shed 2%.
Brent crude was down nearly 2% at 66 US dollars a barrel.
The biggest risers on the FTSE 100 were Pearson up 14p at 849.2p, Next up 64p at 5,380p, Kingfisher up 2p at 228.6p and Auto Trader up 2.2p at 512.2p.
The biggest fallers on the FTSE 100 were NMC Health down 156p at 2,424p, Standard Life down 27.8p at 578.6p, Smurfit Kappa down 100p at 2,186p and DS Smith down 14.9p at 342.3p.