Poor German industrial production figures, raising the prospect of recession in the eurozone powerhouse, has sent shares sliding again despite takeover action in the mining sector.
Airline shares, strong performers in recent days as the drop in the oil price reduces fuel costs, are the biggest losers so far. British Airways and Iberia owner International Airlines Group is down 14.2p to 357.1p while easyJet is 55p lower at £14.12. Sentiment has also been dampened by geopolitical tensions, as well as worries about the spread of Ebola. Amid fears people may be reluctant to travel, Tui Travel is down 8.2p at 389.1p while cruise company Carnival has fallen 69p to £24.26.
Hotels were also hit by news of a confirmed case of the virus in Spain, with Intercontinental Hotels down 45p at £22.84.
Overall the FTSE 100 is down 35.14 points at 6528.51, hit by a 4.0% month-on-month drop in German industrial production in August, compared to a forecast fall of 1.5%.
Investors are also cautious ahead of the latest IMF global growth foreasts.
Some of the damage has been limited by a surge in mining shares, following overnight news that Rio Tinto, up 181p to £31.78, had rejected an approach from Glencore, 1.15p better at 340.5p. Seven out of the top ten risers in the FTSE 100 are mining companies, with Anglo American up 29.5p at 1377.5p and Antofagasta adding 8p to 714.5p.
Among the mid-caps, Cairn Energy has climbed 19.1p to 199p after it said a joint venture had discovered oil at a well off Senegal. Analyst Mark Wilson at Jefferies said:
The FAN-1 exploration well, offshore Senegal, West Africa has discovered 29m of net oil bearing reservoir within an overall gross oil-bearing column of 500m and is described as "having significant potential as a standalone discovery".
This result should see at least 20p [added], in our view.
To use a footballing phrase: We'd have taken this result before the match! For the first exploration well into a previously undrilled basin to find net oil pay and with a number of oil samples recovered to surface is an extremely positive result. But it is the result at the end of the season that investors care about. Cairn can, however, point to its recent UK North Sea farm-out that now looks even smarter from a funding perspective.
But Spirent Communications has dropped 18% to 80.35p after the telecoms testing group said it expected only a small rise in third quarter revenues as business in the US and China remained subdued.
Finally Asos added another 1% to £22.52 following Monday's suggestion by analysts at UBS that Amazon could pay up to £50 a share for the online fashion retailer.
