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FTSE back below 6,000 as concerns rise over dollar

The FTSE 100 suffered its worst one-day drop in three years on Friday, losing 2.2 per cent to fall by nearly 130 points to 5,912.

The decline mirrored falls in the US, Europe and Far East following uncertainty over US interest rates, a weak dollar and concerns over commodity prices.

The losses have been exacerbated by UK directors rushing to sell share options and take profits. UK directors have sold 566m of shares over the last three months while buying just 207m.

Hargreaves Lansdown head of research Mark Dampier says: “The market has run particularly hard since the start of this year. A 10 per cent correction is not overdue and commodities could come down by up to 25 per cent. A lot of people are sitting on big profits and using this as an excuse to take profits. It is probably good for the market, which needs to calm down a bit.”

Dalton Strategic Partnership head of UK equities Glen Pratt believes the market is showing similarities to the dotcom boom of 2000 but he does not expect the fallout to be anywhere near as damaging.

He says: “Many people have been investing or speculating in oil and gas without really knowing what they are investing in, like the rush to invest in technology shares in 2000.”

“With commodity prices out of tune with the long-term average, I see this as a short-term technical correction.”

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