World markets report

Poor results from US banks and tighter fiscal policy in China hurt financial and commodity stocks yesterday, dragging the FTSE100 down to its lowest close in three weeks. The index lost 1.7% to close at 5,420.

Banks suffered after disappointing earnings from Bank of America and Morgan Stanley, with HSBC, RBS and Lloyds all suffering drops, and Barclays worst hit with a fall of 3.6%.

Miners fared poorly after metals prices slid. ENRC was the index's biggest faller, down 6.3%. Xstrata lost 6.2%, and Lonmin 6.1%.

Subscribe to MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Sign up

Energy shares were also weak; BG Group, Royal Dutch Shell and BP all saw falls.

Pharmaceuticals were mixed. Shire topped the list with a rise of 2.6%, but GSL and AstraZeneca gave up earlier gains to close down 1% and 0.5% respectively.

Read the latest stock market news and charts here.

Europe

In Europe, the Paris CAC 40 fell 81 points to 3,928; and the German Xetra Dax was 125 points lower at 5,851.

US

In the US, the Dow Jones Industrial Average fell 1.1% to 10,603; the S&P 500 also lost 1.1% to 1,138; and the Nasdaq Composite was 1.3% lower at 2,291.

Asia

In Asia, Japan's Nikkei 225 and Topix indexes both climbed 1.2% to 10,868 and 956 respectively. In China, the Shanghai Composite index gained 0.2% to 3,158; and the CSI 300 closed up 0.4% at 3,408.

Commodities

Brent spot was trading at $75.45 early today, and in New York, crude oil was at $77.76. Spot gold was trading at $1,112 an ounce, silver was at $17.48 and platinum was at $1,621.

Currencies

In the forex markets this morning, sterling was trading against the US dollar at 1.6187 and against the euro at 1.1494. The dollar was trading at 0.7102 against the euro and 91.76 against the Japanese yen.

UK news

And today, supermarket group Wm Morrison saw Christmas sales figures beat expectations. Like for like sales for the six weeks ending 3 January were 6.5% higher than the same time last year, compared to 4.2% for Sainsbury's and 4.9% for Tesco. The company is still looking for a chief executive after Marc Bolland left for Marks and Spencer.