The FTSE 100 fell to a 12-month low amid concerns across the eurozone.
European nations have performed worse in recent months with growing fears of another continent-wide recession. Germany reported weak export data which sent shockwaves across Europe and UK chancellor George Osborne warned that the UK may not be immune from events across the eurozone.
Germany saw its exports drop by 5.8 per cent in August compared to July. The nation's exports income fell to €92.6 billion (£72.8 billion) and experts have warned of potential financial downturn in the near future. Germany's economy shrank by 0.2 per cent in the second quarter, meaning another contraction in GDP in Q3 would lead to a technical recession.
Commenting on Germany's situation Carsten Brzeski, economist at ING, said: "The magnitude of the fall brings back memories of the peak of the financial crisis in early 2009. The economy seems to need a small miracle in September to avoid a recession in the third quarter.”
The situation in Germany has been felt in the UK with the FTSE 100 closing 50.39 points, or 0.8 per cent, down at 6,431.85 on Thursday (October 9th). London shares were also affected by falling oil prices with both Brent crude and US light crude reporting decreases.
Brent crude dropped by over one per cent to $90.32 a barrel while US light crude was down two per cent to $85.82 a barrel.
There was some positive news on home soil, as shares in Royal Mail grew by one per cent after it announced it had reach an agreement with French competition authorities. The post office had been informed that one of its businesses in France may have breached competition laws but it put £18 million aside to cover the settlement.
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