FTSE 100 tumbles on US stimulus fears, China slowdown

UK stocks were dealt with a double-blow early on Thursday after the US Federal Reserve signalled its intention to begin scaling back stimulus later this year, while data showed China growth continued to wane.

Banks and miners were the sharpest fallers as London's blue chip index declined 98.59 points, or 1.6 %, to 6,250.23, by 0701 GMT. The index was testing support levels at around 6,225 - lows hit in February, April and early June.

The prospect of life after quantitative easing weighed heavily on markets following Fed Chairman Ben Bernanke's statement that the US economy was growing fast enough for the central bank to begin slowing the pace of its $85 billion monthly purchases of Treasuries and mortgage-backed securities this year, with the goal of ending it in mid-2014.

Central banks stimulus measure had contributed to UK equities inflating over the past year to near record highs, but the threat of withdrawal has seen the index dive near 9 % since mid-May.

Adding to concerns over how global growth and corporate earnings will perform in a post stimulus environment was data showing China's factory activity weakened to a nine-month low in June as demand faltered.