By Kit Rees and Atul Prakash
LONDON (Reuters) - Britain's top equity index fell to a 10-week low on Friday as investors dumped shares in companies focussed on South Africa following a reshuffle in the country's government.
Commodities shares also came under pressure on concern about the pace of economic recovery in China and a weakness in Chinese yuan, which could hit companies exporting to China.
The Anglo-African financial services company Old Mutual (L:OML) slumped 10.6 percent after dropping sharply in the previous session, when the rand hit a record low after President Jacob Zuma removed Nhlanhla Nene as finance minister.
"Old Mutual was punished again for its links to South Africa," said Jasper Lawler, an analyst at CMC Markets. "The worry ... is that new finance minister David van Rooyen may have been put in to ramp up spending for political purposes against the best interests of the economy."
Mondi (L:MNDI), a packaging and paper company that has a South African division, slipped 3.1 percent. The small-cap asset manager Investec (L:INVP) fell 10.8 percent.
The FTSE 100 (FTSE) index closed 2.2 percent lower at 5,952.78 points after earlier falling to 5,949.84, the lowest level since late September.
The UK mining index (FTNMX1770) and the oil and gas index (FTNMX0530) both plunged 4.4 percent as concern persisted that economic recovery was faltering in China, the world's top metals consumer.
A sharp decline in the yuan also took a toll, since a weaker Chinese currency hurts export-oriented companies such as automakers, miners and luxury goods. Shares in luxury-goods company Burberry Group (L:BRBY) fell 2.9 percent.
Shares in BHP Billiton (L:BLT), BG Group (L:BG), Royal Dutch Shell (L:RDSa), Glencore (L:GLEN) and Rio Tinto (L:RIO) fell 4.0 to 5.3 percent.
Miner Anglo American (L:AAL) was also hit by a target price cut from Goldman Sachs (N:GS). It fell a further 8 percent on Friday after announcing this week that it would suspend dividends and restructure its business.
Sportswear retailer Sports Direct (L:SPD) extended its losses from the previous session, falling 1.1 percent after Goldman Sachs cut its target price on the stock. The share fell 11 percent on Thursday following a disappointing set of first-half results.