European stocks resumed their falls on Wednesday as fears about the Chinese economy once again gripped investors and a late plunge in US stocks unnerved the market.

The FTSE 100 fell by 102 points, or 1.68%, by the close of trading to 5,979 points, below the key 6,000 mark. Leading British shares had staged a partial recovery on Tuesday after heavy falls on Monday.

But Sir Martin Sorrell, head of WPP, the world’s biggest advertising company, which employs 16,000 people in China, expressed his confidence in the Chinese economy.

“I remain a raging bull in regards to China,” he told BBC Radio 4 Today’s programme on Wednesday morning, adding that the world should not forget how far the Chinese economy had come since 1985 when it “embraced the capitalist economy”.

He said the Chinese stock market had become overblown and was undergoing a correction, but long-term secular growth in China was here to stay.

How worried should we be about China’s stock market turmoil? Link to video

The largest fallers were the miners Glencore, Antofagasta and Anglo American - other big losers were Unilever, which relies on China and other emerging markets for much of its growth, Standard Chartered, the Asia-focused bank, and the brewer SAB Miller, which jointly owns China’s largest beer producer.

Germany’s Dax index ended the day down 1.3%, while France’s CAC 40 lost 1.4%, despite the European Central Bank hinted at more monetary stimulus.

The sharp falls in European markets, exacerbated by thin August trading, reflected continuing concern about the direction of China’s economy after the country’s central bank cut interest rates on Tuesday. The Chinese stock market suffered a late sell-off to close down 1.3%, its lowest since December 2014, after trading up for much of Wednesday. The People’s Bank of China took fresh action today, by pumping another 140bn yuan into the interbank money market system.

The PBoC’s decision to cut rates for the fifth time in nine months on Tuesday and compel banks to make more money available to lend was the authorities’ latest move to support the world’s second-biggest economy. China’s economic growth and manufacturing output are slowing and shares have plummeted since June.

Hewson said: “Yesterday’s actions by the People’s Bank of China should have acted as the palliative that equity markets were looking for, and for a while it seemed to work quite well, and yet there was always the nagging doubt that it was a mere attempt at window dressing.”

China’s problems have hit confidence around the world because its growth has served as a backstop for the global economy since the financial crisis started. China is the world’s biggest consumer of commodities such as coal and metals and is an important market for exports of machinery and, increasingly, consumer goods.



While acknowledging that Chinese policy makers had erred in trying to “fight the market”, Sorrell maintained that “in the fullness of time it will smooth out”.

As for criticism from the west, he said: “They ain’t done too badly since ‘85 and people in glass houses shouldn’t throw stones.”

China is WPP’s third-biggest market. Earlier, the company said it expected to hit its full-year net sales and margin targets after a sharp upturn in trading in July.