FTSE 100 Slips as Japan's Nikkei Drops 7%

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LONDON -- After having reached a new 12-year high earlier in the week, the FTSE 100 (FTSEINDICES: ^FTSE  ) has suffered this morning due to a knock-on effect from Japan's Nikkei stock exchange, which fell more than 7% overnight.

Investors looking at the Japanese market over the last few months would have noticed a precarious bubble forming that might pop at any time -- and it looks like it has now. Mid-November saw the Nikkei closing at about 8,700 points, but since then it had risen dramatically to 15,700 in just six months. However, yesterday's trading saw the index finish 7.3% lower following disappointing economic data from China.

The news centered on China's factory activity, which shrank for the first time in seven months. As expected, the heavy loss in Japan is causing ripples in other major markets. 

Yesterday, the FTSE 100 saw its second-highest close ever at 6840.3 points -- bested only by December 1999's 6930.2 figure, which was fueled by the dot-com boom. But following the news from Japan, the U.K.'s premier index has plunged 1.8%, to 6,716.

Here at The Motley Fool, we try to avoid predicting what the stock market will do next, preferring to focus on the underlying businesses of the companies we invest in. We tend to invest without worrying about short-term price movements or wider market sentiment.

While many blue-chip shares have been trading at new highs in recent weeks, today's news saw every single share in the FTSE 100 fall this morning, with the likes of ARM Holdings among the worst hit, currently down 5.7%.

Many Fools have commented that they've been waiting for a rerating or correction on some of their favorite stocks, so this dip may well provide a buying opportunity depending on your levels of "dry powder."

Why not start doing your research for potential investments within the FTSE 100 by reading this exclusive wealth report, which reviews five particularly attractive opportunities? All five of these blue-chip companies offer a mix of robust prospects, illustrious histories, and dependable dividends and they've just been declared by The Motley Fool's top analysts as "5 Shares You Can Retire On." The report is completely free but will only remain available for a limited time -- simply click here to get it sent to your inbox immediately.

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