FTSE 100 set for biggest weekly drop since March

LONDON (Reuters) – Britain’s blue-chip FTSE 100 dropped to its lowest level in five months on Friday as worries about China’s economy and concerns that global interest rates will remain higher for longer hurt risk sentiment.

By 1257 GMT, the FTSE 100 was down 1.2% to its lowest level since March 20. For the week, the index was down over 4% and on track for its biggest weekly decline since the week of March 17, at the height of the banking turmoil that rocked global markets.

The weakness has been broad-based throughout the export-heavy index, with basic resources shares shedding 4.3% this week due to their exposure to the Chinese economy.

Meanwhile, retail stocks shed 1.9% on Friday after data showed a bigger-than-expected drop in retail sales in July as heavy rain put off shoppers.

(Reporting by Samuel Indyk, editing by Alun John)