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FTSE 100 sees biggest fall in two months dragged down by tobacco shares and fears over India Covid variant

The UK’s FTSE 100 fell sharply on Tuesday, dropping below 7,000 again as tobacco shares tumbled and global sentiments on recovery took a hit amid an alarming rise in Covid-19 cases.

The blue-chip index dropped by 2 per cent or 140 points, the biggest fall in two months after it claimed its pre-pandemic levels back, to close the day at 6,860. The domestically focused FTSE 250 fell 1.70 per cent, or 382 points, to close at 22,108.

The rising Covid-19 infections hit travel companies and airline stocks tumbled, and the threat of new nicotine rules in the United States led to sharp falls for British tobacco stocks, wiping off £5bn in market value.

British American Tobacco fell 7.6 per cent or 221 points to £26.92 – a five-week low – and Imperial Brands fell 7.3 per cent or 115 points to £14.65, its lowest price in over four weeks.

While the biggest loser on the FTSE 100 was International Airlines Group which posted an 8.11 per cent decrease, decrease, falling 15 points, taking the stock price to £194.

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Stock market extended their losses on both sides of the pond, as US stocks also fell for a second day on Tuesday despite strong company earnings data. The Dow Jones Industrial Average dropped 256 points, or 0.8 per cent, to 33821, while the S&P 500 fell 28 points, or 0.7 per cent, to 4134 and the Nasdaq Composite lost 128 points, or 0.9 per cent, to 13786.

Asian markets also got off to a slow start on Wednesday, with worsening coronavirus outbreaks in India and Thailand casting a shadow over hopes of an economic rebound as most indices trade lower.

Japan’s Nikkei 225 opened in red and fell more than 2 per cent till noon, with South Korea’s Kospi and Taiwan Index also lagging in red. The Hang Seng has fallen by 474 points or 1.63 per cent so far. But the Shanghai Composite saw a strong recovery after early hours, and was trading in green around noon.

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Indian markets were closed on Wednesday due to a national holiday. On Tuesday, the Sensex ended 244 points lower at 47,706 while the Nifty fell 63 points to settle at 14,296, amid another surge in Covid infections as the country surpassed 2 million active cases.