London’s blue-chip stocks stayed deep in negative territory on Wednesday as China's efforts to sort out its economy baffled traders.
The FTSE 100 Index dropped 81.17 points to 6000 after the People's Bank of China (PBoC) cut interest rates by 25 basis points and further relaxed bank lending limits.
It pumped US$21.8bn into the system and lowered the main interest rate to make borrowing money easier and encourage economic growth.
Economists and analysts said market reaction to injections and withdrawals of stimulus was becoming more volatile.
CMC Markets analyst Jasper Lawler said: "Rather than getting ahead of the game with a well thought-out plan for stabilising the economy, the People’s Bank of China appears to be reluctantly easing policy any time there’s a drop in share prices.
"The net effect is that markets clamour for more stimulus while at the same time losing faith it will actually work."
Other analysts said China needed to do more. Jameel Ahmed at FXTM Analysis said: "The interest rate cuts from the PBoC are nowhere near enough to support continuously declining economic momentum in China."
Overnight, the news provided temporary respite, helping Chinese equities rise as much as 4% before a late sell-off sent the Shanghai Composite a further 1.3% lower at 2,927.
Miners weighed heavily on the Footsie as the central bank actions caused further falls in commodity prices.
Copper miner Antofagasta (LON:ANTO) softened 9p to 570.5p and platinum miner Anglo American (LON:AAL) dropped 5.8p to 677.9p.
In the mid-cap space, Paddy Power (LON:PAP) has announced plans to merge with rival Betfair (LON:BET) in a deal to create a gaming giant.
Paddy said its shareholders would own 52% of the group while Betfair investors would have a 48% stake. Shares in Betfair rose 17.3% to 3,054p while Paddy Power jumped 17.1% higher at 91.9p.
It represents the latest move in consolidation of the sector, following on from news of Ladbrokes's (LON:LAD) planned merger with Gala Coral. Ladbrokes meanwhile, lost 3.8% to 97.7p.
Advertising and marketing group WPP (LON:WPP) backtracked 37p to 1325p as it forecast a better third quarter but voiced caution about the global economy.
To small caps, and the unfortunately tickered Asiamet Resources (LON:ARS) has uncovered a high-grade copper zone at Beruang Kanan (BK), in Kalimantan, Indonesia, that has the potential to transform the economics of the project.
The latest hole produced an 11-metre section grading 2.96% copper. Significantly, it was intercepted from just six metres below surface. Shares rocketed 43.5% to 1.65p.
Oil explorer 88 Energy (LON:88E) gushed 7.6% to 0.56p on news that it had completed the acquisition of an 87.5% stake in the Icewine exploration project in Alaska.