By Kit Rees and Liisa Tuhkanen
LONDON (Reuters) – The FTSE 100 posted its biggest monthly drop in August since 2012 after fears over China’s growth hit global markets, although it managed to recoup more losses on Friday following a volatile start to the week.
The FTSE 100 (.FTSE) was 55.91 points, or 0.9 percent, higher on the day at 6,247.94 after a week when it both dropped to multi-year lows and staged its biggest one-day gain in years.
The index fell 6.7 percent this month, its worst performance since May 2012, after China’s surprise devaluation of its currency spooked markets. The declines have erased gains made in the first quarter and left the index in a loss for the year.
“February was wrong, as it’s clearly been proved the markets were way too optimistic … August is wrong, it’s way too pessimistic,” said Michael Browne, fund manager at Martin Currie, adding that August was often a weak month for equities.
“We have taken advantage of the opportunities that the markets have presented to us in a negative August … in the expectation that we are going to come back in September.”
The FTSE’s rally on Friday built on a 3.6 percent gain in the previous session, as strong U.S. data eased concerns about slowing Chinese growth. The index closed up 1 percent for the week.
“Clearly, we’re getting back to normality,” said Richard Hunter, Hargreaves Lansdown’s head of equities.
Energy stocks were among the top gainers as oil prices recovered. Oil company BG Group (BG.L) rose 3.4 percent and Royal Dutch Shell (RDSa.L) 2.5 percent.
The index’s top gainer was satellite communications company Inmarsat (ISA.L), rising 4.3 percent after the launch of its third Global Xpress satellite, which will provide mobile broadband service to customers in the remotest regions, including air flights.
Among mid caps, Debenhams (DEB.L) fell by 7.1 percent after UBS cut its rating, citing survey findings that suggest customer intent to purchase from the company’s stores is the lowest among peers.
Footwear company Jimmy Choo (CHOO.L) lost 4.2 percent after underwhelming first half results.
(Editing by Larry King)
