FTSE falls again as worries over US debt prompt share selling
Rattled investors sold shares around the world today amid concern about America's economic future and President Obama's debt crisis.
In London the FTSE lost another 42.78 points this morning to stand at 5731.65, despite the news that a last-gasp deal to avoid a federal debt default had been successfully voted through the House of Representatives.
The fall came on top of an overall loss of 40 points yesterday, when early euphoria about the deal quickly fizzled out as the scale of cutbacks sank in, coupled with worry about the depth of political disagreements in the USA.
The Washington deal allows the embattled president to borrow another £1.5 trillion to avoid a default but insists on savings over 10 years of at least £1.4 trillion.
It was passed by 269 votes to 161 overnight, with the deal described by one senior Democrat, Emanuel Cleaver, as "a sugar-coated Satan sandwich".
British gloom about slow growth was intensified by an International Monetary Fund report that predicted families would be an average £1,500 worse off for the next five years because of higher taxes and lower benefits imposed by the Government's deficit-reduction programme.
However, Chancellor George Osborne received a boost as UK gilt prices fell to a record low, seen as a vote of confidence in Britain's financial stability.
