Markets on slide over China fears

STOCK markets across the world tumbled yesterday as events in China overshadowed signs of progress in Greece.

The European Commission said Greece had reached an agreement ‘in principle’ with its creditors over a fresh £60bn bail-out required to save it from bankruptcy and keep it in the EU. Greek MPs will vote on the agreement – which includes how bad bank loans will be dealt with – on Thursday.

The country needs a deal by August 20, when it has to make a debt repayment of more than £2bn to the European Central Bank.

Shares in Athens rose more than 2pc. But investors around the world were more worried about China’s decision to devalue its yuan currency by almost 2pc against the US dollar.

The People’s Republic stressed this was a ‘one off’ event designed to tie the currency more closely to market rates. But economists raised fears that China could trigger a bruising ‘currency war’ as other nations devalue their currencies to boost flagging exports.

The devaluation was also widely viewed as evidence that the world’s second biggest economy may be weaker than previously thought.

The FTSE 100 fell 71.68 points to 6,664.54, while Germany’s Dax fell by 2.75pc and the US Dow Jones slid 1.3pc in early trading.

DIAGEO chief executive Ivan Menezes ( pictured) saw his pay package almost halve in the wake of last year’s lacklustre performance. The drinks boss received remuneration of £3.9m according to the 2015 annual report, down from the £7.3m received the previous year. One of the long-term incentives awards linked to the share price, which had paid out £1.6m the previous year, only triggered £1,000 in 2015. This was because the shares increased 5pc over the past 12 months. Last week investors were told sales at Diageo’s key US business had missed forecasts. The annual report also showed Menezes received £96,000 connected to relocating from his US home to the UK, and a £1,250 drinks allowance.