FTSE: 5,393.14 (–191.37) Mid-250: 10,570.64 (–423.95) Small Cap: 3,069.28 (–81.29)

THE FTSE 100 fell more than 3 per cent yesterday, taking the blue-chip index into official correction territory after falling more than 10 per cent from its most recent peak in May.

Heavy selling of mining companies, oil groups and banks, the largest capitalised sectors on the London market, dragged the FTSE 100 down by 191, points, 3.4 per cent lower on the day to 5,393.14 – its lowest mark of the year.

The latest sell-off follows a week of selling on international markets as fears about the outlook for the global economy have grown. Recent data from the US has showed signs the economy is slowing and the latest sell-off comes ahead of what is viewed as a crucial employment report today.

“The sharp falls for the FTSE 100 is a big concern going into tomorrow’s non-farm payrolls figure,” said Joshua Raymond, market strategist at City Index.

The renewed selling followed four successive sessions of declines and intensified as US markets also fell sharply in morning trade on Wall Street.

Trading in Lloyds Banking was volatile after its interim profit report. At the end of the session, banks were sharply lower and Lloyds fell 10.2 per cent to 35p, losing initial gains of almost 2 per cent and compounding a week of sustained losses in the run-up to the release of its numbers.

The pattern was the same in the wider banking sector, where nascent morning gains failed to stand the test of trade and faded into sharp losses by the close.

Royal Bank of Scotland was 6.1 per cent weaker at 30.28p. Barclays fell 7.8 per cent to 196p and HSBC was 2.6 per cent softer at 578½p.

Worries about the outlook for global growth hit mining shares, adding to the pressure on the index. Randgold Resources proved the exception as the gold miner climbed 6.6 per cent to £59.20 thanks to record bullion prices.

Unilever provided another bright spot, climbing 2.7 per cent at £19.57 after it beat forecasts for the second quarter, reporting underlying sales growth for the period of 7.1 per cent, ahead of con-sensus forecasts of 5.5 per cent.

Inmarsat was the benchmark’s biggest single faller – tumbling 19.3 per cent to 394½p – after it cut revenue growth forecasts from its core mobile satellite services wholesale business.