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* FTSE 100 hits 13-month low, down 1.9 pct
* Asset managers and investment firms battered
* Ocado sinks 5.5 pct after disappointing Q4 update
By Helen Reid
LONDON, Feb 6 (Reuters) - Britain’s major share index sank to a 13-month low on Tuesday as a violent global sell-off in stock markets and spike in volatility shook investors.
The FTSE 100 was down 1.9 percent at 7,197 points by 1000 GMT, having sunk to its lowest level since December 2016 in early deals.
It was set for its worst daily fall in 10 months as investors rushed out of equities, which have surged since the start of the year.
“There’s a sense of relief that we finally have a meaningful correction, it’s long overdue. We have been positioned for it for a while, so we can actually breathe again,” said Christopher Peel, chief investment officer at Tavistock Wealth.
“This type of price action, where you have a correction as severe as it has been, is a great reminder to investors, traders and regulators that it’s not all a one-way bet,” he added.
“It’s ultimately a good thing, so that we get some long-term investors that do have cash on the sidelines selectively adding to their positions.”
The stars of the past months’ rally were the worst fallers on Tuesday.
Financials led the slide, taking 33 points off the index. HSBC, Prudential, Lloyds and Standard Chartered fell 2.0 to 2.6 percent.
Asset managers also featured prominently among the worst-performing stocks as the global markets ‘melt-up’ reversed.
Investment trust Scottish Mortgage tumbled 4.8 percent as the sell-off in U.S. tech stocks took its toll on the fund, whose top holdings include Amazon and Tesla.
Asset managers Standard Life Aberdeen and Schroders and retail investment platform Hargreaves Lansdown fell 2.7 to 3 percent.
Hedge fund firm Man Group was the biggest weight on the FTSE 250, its shares tumbling 4.7 percent.
Oil majors BP and Royal Dutch Shell also took a sizeable chunk out of the index as the rout in equities sent crude prices tumbling.
Mid- and small-caps were not spared from the sell-off.
The FTSE 250 fell 1.7 percent while the small-cap index sank 2.4 percent, set for its worst day since the Brexit vote.
Ocado shares sank 6.1 percent after the online supermarket said investment would hold back 2017-18 earnings, and that it was placing about 5 percent of its equity.
“Given the balance sheet leverage and the need for capital in respect to Ocado Smart Platform deals, we are not entirely surprised with the share placing this morning, however the timing is unfortunate given the equity market moves we have seen in the U.S. yesterday,” wrote Berenberg analyst Victoria Maigrot.
“We have no pricing info yet but suspect the placing was at a discount.”
U.S. stock futures were trading higher by mid-morning, indicating a potential relief bounce later in the session.
“People are going to come in overnight,” said Tavistock’s Peel.
“There’s no way the Dow should fall that much in such a short period of time. I don’t think we are seeing the Fidelitys or Blackrocks of this world selling down equity positions, something was out of whack yesterday.” (Reporting by Helen Reid; Editing by Kevin Liffey)