LONDON (Reuters) - FTSE 100 dropped to a 16-week low on Tuesday as investors dumped risky assets after North Korea fired a missile over Japan.
The blue chip FTSE 100 .FTSE was down 0.9 percent at 7,337.43 points at its close, in line with a broader slide among European shares.
Early on Tuesday, North Korea fired a ballistic missile over Japan’s northern Hokkaido island into the sea, shaking global markets.
“The race to the safe havens has seen the dollar ditched, which is resulting in some fresh and unwelcome sterling and euro strength,” Mike van Dulken, head of research at Accendo Markets, said.
“The banks, the miners, are the first to succumb to risk aversion, and those with fx exposure, be it via their activities or, as can often be the case, their dividends can be worth less if they’re paid in foreign currency,” van Dulken added.
Financials were the biggest weight on the index, with the sector wiping more than 22 points off the index. Lenders Lloyds (LLOY.L), Barclays (BARC.L) and Standard Chartered (STAN.L) all fell between 1.2 and 2 percent.
Building materials firm CRH (CRH.L) was among the biggest fallers, down 2.7 percent following a target price downgrade from Investec, who remained positive on the stocks despite FX and higher energy costs.
ITV (ITV.L) dropped 4.9 percent, tracking broader losses among European media stocks .SXMP after German peer ProSiebenSat.1 (PSMGn.DE) slumped on the back of a weaker outlook for advertising in the third quarter.
Precious metals miners were a bright spot, however, with Randgold Resources RRS.L and Fresnillo (FRES.L) up 4.6 percent and 2.6 percent as gold prices rose to their highest since November on the back of demand for safe-haven assets. [GOL]
Reporting by Kit Rees; Editing by Janet Lawrence