London close: Markets dive on dismal global outlook

Gloomy comments from the Federal Reserve last night followed by even gloomier remarks by leading economists terrified the markets on Thursday, with benchmarks in the UK, Europe and the US suffering falls of between 3% and 5% as of 16:30. The FTSE 100 in London was nearly 5% down by the end of the session, coming worryingly close to the 52-week low of 5,007 during intraday trade."Information received since the Federal Open Market Committee met in August indicates that economic growth remains slow," the minutes from the meeting of the Federal Open Market Committee (FOMC) read. "Recent indicators point to continuing weakness in overall labour market conditions, and the unemployment rate remains elevated." While the Fed announced that it intends to purchase, by the end of June 2012, $400 bn of Treasury securities with remaining maturities of 6 years to 30 years (and to sell an equal amount of Treasury securities with remaining maturities of 3 years or less), market chatter was pointing to the fact that Fed president Ben Bernanke did not announce sufficient measures to compensate for his gloomy outlook.Worries of a dip in demand for mineral resources sent commodity prices tumbling across the board. Copper and silver prices were over 7% and 8% down by the end of the day, while gold prices were 4% lower. The miners were out of favour obviously, with Vedanta Resources, Antofagasta, Kazakhmys, Fresnillo and Rio Tinto all finishing over 10% lower. Antofagasta was not helped by the news that Pakistan's Baluchistan province has voiced objections to a mining lease for a significant copper and gold project in the country's southwest region. Not helping the mood were comments from well-known economist Nouriel Roubini, affectionately nicknamed Dr Doom, who said that slowing growth could quickly turn into contraction for developed economies. "These shocks are going to keep on occurring. Thinking the problems of the euro zone are going to go away is delusional [...] The risk is actually that there is going be deceleration and the beginning of an economic contraction," he said. The chief executive of the world's biggest bond investment fund, the Pacific Investment Management Company (PIMCO), says the euro debt crisis cannot simply be solved by supporting struggling nations like Greece and Ireland. Mohamed El-Erian argues that only massive support for Europe's banks will stabilise the situation that threatens to plunge Europe into recession. In remarks today to French news daily Le Figaro the European Union's financial-services commissioner Michel Barnier said that he cannot rule out the possibility that some European banks will need state aid, Bloomberg reported. Meanwhile, Greece has erupted in a new wave of anger against government cuts as the country's politicians desperately fight to stave off bankruptcy. No trains, buses or taxis are running in any part of the country as a national transport strike goes ahead to protest at the plight of the tens of thousands of Greeks who are seeing their incomes slashed by austerity measures. In company movement, banking peers Lloyds and Barclays were among the heavy fallers, along with luxury brand Burberry which fell 10% following a strong rise earlier in the week. The stock was downgraded to sell by AlphaValue.There were no risers on the Footsie.However, water group United Utilities was a relative outperformer, falling just 1.4%, after assuring that it is on track to meet its half-year targets despite rising costs.Flying high was no-frills airline easyJet which bucked the trend after raising revenue-per-seat guidance.Betfair saw its share price dive on speculation that company chairman Ed Wray could be the next in a growing line of senior managers who have quit the company. In other news, the Confederation of British Industry's industrial trends survey shows more manufacturers saw a slackening in demand in September than an increase. The analysts' consensus was a reading of -5% but the survey gave a figure of -9%. BCFTSE 100 - RisersFTSE 100 - FallersVedanta Resources (VED) 1,117.00p -13.28%Antofagasta (ANTO) 972.50p -12.70%Kazakhmys (KAZ) 846.50p -12.37%Fresnillo (FRES) 1,709.00p -11.68%Rio Tinto (RIO) 3,023.00p -10.80%Lloyds Banking Group (LLOY) 32.51p -10.09%Burberry Group (BRBY) 1,361.00p -9.81%Eurasian Natural Resources Corp. (ENRC) 569.50p -9.75%Xstrata (XTA) 849.50p -9.61%Barclays (BARC) 138.85p -9.40%