FTSE 100 drops as yuan fall hits markets
August 12, 2015, 6:58 pm   

(Close) The UK stock market closed down 1.4%, with mining stocks bearing the brunt after a further fall in the Chinese yuan hit prices of metals.After Tuesday`s 1.9% devaluation, China`s central bank cut the guiding rate for the yuan for a second day.The fall in the yuan has hit commodity prices, driving down share prices in the big UK-listed mining companies.The FTSE 100 was down 93.35 points at 6,571.19, with shares in mining giant Glencore falling 5.7%.The losses were echoed across other major European stock markets, with Germany`s Dax index and France`s Cac 40 down 3.3% and 3.4% each.Companies with direct exposure to China came under pressure. Shares in fashion house Burberry, for which China is an important market, fell 3.5%, having dropped more than 4% on Tuesday.Shares in Unilever were down 4.3% after Goldman Sachs cut its rating on the consumer goods company to "sell" from "neutral".Randgold Resources was the top riser in the FTSE 100, climbing 5.4%, after the price of gold rose.Gold is traditionally seen as a safer asset in times of market turmoil, and the spot price of gold touched a three-week high of $1,119.80 an ounce on Wednesday morning before slipping back.On the currency markets, the pound fell sharply against the euro after signs of a slowdown in UK wage increases pushed back market expectations of when interest rates might rise.Latest figures from the Office for National Statistics showed unemployment rose slightly in the three months to June, while earnings growth - including bonuses - slowed to an annual rate of 2.4%.The pound fell by 1%, more than one euro cent, against the euro to €1.3959 but edged up 0.42% against the dollar to $1.5638.



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