FTSE slumps another 1.4% with chipmakers hit by Microchip warning

As leading shares fell once more, marking a third week of decline, chip makers were under pressure after US group Microchip Technology warned on sales.

It said its second quarter performance would be lower than it forecast in July, hit by a weak September, particularly for its Chinese sales.

The news sent CSR, whose chips are used in products such as Apple’s Beats headphones and where Microchip has until 15 October to decide whether to make a firm bid, 45.5p lower to 671p on concerns about whether a deal would now be consumated.

Other chip designers also fell back, with Arm down 50p to 842.5p and Imagination Technologies 5.5p lower at 172p.

The FTSE 100 finished at 6339.97, down 91.88 points or 1.43% on the day and 188 points on the week. This was its lowest level since October last year.

A toxic cocktail of a slowdown in the global economy, the situation in the Middle East and the spread of Ebola combined to send investors scurrying for cover.

Tullow Oil was the day’s biggest faller, down 45p at 526p on disappointment at the outcome of drilling at its Sputnik-1 well offshore Gabon and despite the sale of its stakes in the Schooner and Ketch assets in the North Sea to Faroe Petroleum.

With the oil price sliding on fears of oversupply and falling global demand – Brent crude is currently down another 0.5% at $89.53 a barrel – Royal Dutch Shell A shares were down 54.5p at £21.91 while BP was 7p lower at 428.15p.

Mining shares were also under pressure, with BHP Billiton off 52p at 1613.5p and Antofagasta down 24.5p at 661.5p.

Vedanta picked a bad day to report a 4% quarter on quarter fall in zinc production and an 8% drop in oil and gas, and its shares lost 71p to 852.5p.

The Ebola threat continued to unsettle the travel and leisure sectors, with Tui Travel 13.1p lower at 343.8p and Carnival closing down 61p at £22.07.

But easyJet recovered 7p to £13.48 after its recent decline.

Intercontinental Hotels dipped 5p to £21.95 while Whitbread lost 34p to £39.58. Barclays analysts said:

The risks associated with Ebola have the potential to be significant, and this alone is enough to mean investors are likely to remain cautious on the space in the short term. As long as Ebola remains a ‘tail risk’, however we continue to regard Whitbread as the most attractive stock in the leisure sector. We expect H1 results on 21st October to be a positive catalyst as we expect 100bp margin growth for hotels & restaurants along with an upbeat outlook commentary and clarity on the mix of future room openings.

But as investors sought havens, AstraZeneca added 90p to £43.

FTSE slumps another 1.4% with chipmakers hit by Microchip warning