FTSE falls over 100 points on global recovery fears

The FTSE 100 index fell more than 100 points this morning after a warning of a second wave of write-offs at European banks and news of a slowdown in China's manufacturing raised fresh doubts over the global economic recovery.

The FTSE lost over 106 points to 5081.55 in early trading, a drop of 2.07%.

BP shares were the biggest faller on the FTSE this morning, slumping more than 13% after the oil giant's attempts to stop the oil spill in the Gulf of Mexico failed.

The European Central Bank warned last night that Europe's banks will have to set aside another €123bn to cover bad loans this year, and an additional €105bn in 2011. The banks have already written off €238bn between 2007 and 2009.

News that growth in China's manufacturing output slowed in May underlined that Asian exporters remain vulnerable to any waning of demand from Europe and elsewhere. Oil tumbled more than $1 a barrel on the news. North Sea Brent crude oil futures for July dropped $1.05 to $73.60 a barrel.

In Asia, stocks were also down. Japan's Nikkei fell 56.87 points to 9711.83, a drop of 0.6%. Hong Kong's Hang Seng was down 1.4% at 19492.59 and the Singapore index fell 1.1% to 2722.11

http://www.guardian.co.uk/business/marketforceslive/2010/jun/01/bp