FTSE 100 index down 1 2 per cent

The FTSE 100 fell on Wednesday (August 26th), following declines in European and Asian markets as concerns over the Chinese economy continue.

On Tuesday, the index posted its biggest one-day rise since 2011, after China cut interest rates in an effort to calm the markets.

However, that relief didn't last long, as this morning, the FTSE 100 was back down 1.2 per cent, as investors re-focussed on the deteriorating Chinese economy and its impact on the global market.

Analyst Michael Hewson told Reuters that the drop in Chinese interest rates was a temporary respite from the on-going economic turmoil.

"On the face of yesterday's actions by the People's Bank of China should have acted as the palliative that equity markets were looking for, and for a while it seemed to work quite well.

"And yet there was always the nagging doubt that it was a mere attempt at window dressing to assuage a sulky market," he said.

Market movements

The FTSE 350 mining index was down 1.6 per cent. Glencore was one of the top fallers. It lost 2.3 per cent after South Africa's Eskom said it wanted compensation for mining subsidiary Optimum if it is unable to supply coal to Escom's Hendrina power plant.

BHP Billiton fell 1.1 per cent. Rating agencies said it might come under more pressure later this year.

HSS Hire dropped 35.7 per cent, following an announcement that it expected earnings below market expectations. Numis and JP Morgan both cut their price target for the stock.

In a note about HSS, Numis said: "A second profit warning within six months of the IPO has reduced our confidence that HSS can deliver growth rates significantly ahead of the market."

Bookmakers Betfair and Paddy Power both saw their shares go up, following the announcement that they were in talks about a possible merger.

As for currencies, the pound was up 0.04 per cent against the dollar at $1.5692 and up 0.18 per cent against the euro at €1.3642.