FTSE shares hit 5-month low

London shares were at a five-month low Wednesday as further cracks in the US economy and Europe's escalating debt crisis rattled investors.The FTSE 100 Index fell more than 1% on fears that vast spending cuts passed under this week's US debt deal could shake the already fragile US economy into another recession.Outside the US, worries over the eurozone persist as Spanish and Italian bond yields surged, reflecting a lack of confidence in the country's finances, analysts said.The global uncertainty triggered a retreat to defensive stocks and safe-haven investments - including gold, which hit another record high.President Barack Obama yesterday warned his nation was suffering a "Washington-inflicted wound" after the Senate approved a deal which includes 2.4 trillion US dollars (1.5 trillion) of spending cuts in the next decade.Elsewhere, concerns have been raised over the security of the US's AAA credit rating, which is facing the prospect of a downgrade, and weak consumer spending data added to the bleak American picture, the analysts added.The uncertainty boosted gold prices - considered a secure investment - to a record high of 1,674 US dollars an ounce, before they settled at around 1,666 US dollars.But the UK and the pound have also emerged as a so-called safe-haven - territory normally reserved for the US dollar.The yield on 10-year gilts, the benchmark UK government bond, fell to a record low of 2.76% and sterling strengthened against both the dollar and a basket of currencies - signaling confidence in the UK's financial position compared with other nations.The Treasury seized on the figures and took the opportunity to laud its deficit-busting austerity measures and hail the UK as a safe haven during recent "international storms" Banks and the heavily weighted mining sector all fell on the FTSE 100 as investors' fears over the global economic recovery heightened.