Fear factor sends UK’s FTSE down through 5,400 mark
LONDON, May 16 – Britain’s top share index fell through the 5,400 point level for the first time since mid-December, driven lower by a slump in heavyweight mining stocks and fears over Greece, which have pushed investors out of equities and into cash or gilts.
The FTSE 100 index was down 0.9 per cent, or 51.12 points, to 5,386.50 points – its lowest level since around the middle of December.
In Greece, the country’s president spoke of “fear that could develop into panic” at its banks in the weeks before fresh elections that could precipitate Athens’ exit from the euro zone, sending further shivers across financial markets.
Concerns over Greece and its impact on other debt-ridden European economies have caused increasing numbers of investors to pull out of riskier assets such as equities, and into safer havens such as cash or government bonds.
British gilt futures rose as the FTSE 100 fell back, and Charlotte Square fund manager Amanda Forsyth said her firm remained “underweight” on equities and “overweight” on cash.
“It would be very brave to put risk on the table. Like a lot of people, we are running high cash balances,” said Forsyth, whose firm manages around £100 million (RM496.92 million) in assets.
Mining stocks dropped, as BHP Billiton – the world’s biggest miner – said it expected commodity markets to cool further.
The Reuters-Jefferies CRB index, a closely followed indicator for commodities, has fallen more than 11 per cent since hitting a five-month peak in late February amid a broader sell-off in markets caused by Europe’s sovereign debt turmoil.
The Bank of England added to the bearish economic picture, warning that economic growth in Britain was subdued and remained vulnerable to the euro zone debt crisis.
Polymetal International was the worst-performing FTSE 100 stock, falling 4.8 per cent, while a UBS downgrade sent rival miners Glencore and Xstrata down by between 3-4 per cent.
Oil rig maker Lamprell was the worst performer on the FTSE 250 mid-cap index, plunging around 60 per cent after issuing a profit warning.
Overall, stocks trading without the entitlement to their latest dividend also knocked 6.22 points off the FTSE 100 index.
Speciality chemicals maker Croda was the stand-out FTSE 100 stock, rising by around 4 per cent to top the leaderboard after winning entry to a key MSCI index. – Reuters