Britain’s FTSE at 6-month low on fears over Europe
LONDON, May 18 — Britain’s top share index fell to its lowest level since late November today, as growing fears over the Greek and Spanish economies hit markets and heavyweight financial and commodities stocks.
The blue-chip FTSE 100 index was down by 42.44 points, or 0.8 per cent, to 5,295.94 points by 1025 GMT. Yesterday the index closed below 5,400 points for the first time this year, and was set to record its third consecutive week of losses.
Traders and investors cited persistent worries over debt crises in Greece and Spain and consequent pressure on other euro debtors as the principal driver behind the fall in the FTSE and other equities markets.
“Markets do look oversold but there’s still a lot of uncertainty out there. There is a realisation that it’s taking longer to sort out the global crisis than initially thought,” said Bastion Capital’s head of equities Adrian Slack.
Commodities group Vedanta was the worst-performing FTSE 100 stock, dropping by around 4 per cent while rival Xstrata fell 2 per cent, due to worries that a weakening global economy will sap demand for their base metal products.
Britain’s part-nationalised banks Royal Bank of Scotland and Lloyds were also on the loser board, due to concerns over their exposure to euro debt.
The FTSE 350 banking index was down 1.6 per cent, having slumped by around 30 per cent over the last three months.
Fresnillo rises above the fray
German finance minister Wolfgang Schaeuble added to a sense of gloom by saying that market turmoil over the euro zone crisis could last another 12 to 24 months.
Speculation has also increased that Greece, which holds fresh elections next month after voters rejected austerity measures imposed on it by the EU and IMF, will have to abandon the euro zone currency bloc.
EU trade commissioner Karel De Gucht said the European Commission and European Central Bank were working on emergency scenarios in case Greece has to quit.
Gold mining specialist Fresnillo rose around 2 per cent, with traders attributing its gains to an increase in the price of gold, often seen as a safe-haven asset in uncertain times. Fresnillo is more of a gold-mining specialist than other commodities groups such as Vedanta or Xstrata.
However, traders said the FTSE 100 remained vulnerable to further sell-offs.
“Although the FTSE is now oversold, it can still trade lower,” said Charles Stanley analyst Bill McNamara. — Reuters
