LONDON: Britain's top share index was down 1.6% by midday on Thursday, as dire forecasts for the US economy led to sharp falls in commodity prices, denting energy and mining companies. By 1158 GMT the FTSE 100 had fallen 62.41 points to 3,943.03, after falling 4.8 percent on Wednesday. In the U.S., the Federal Reserve slashed its economic growth forecasts and consumer prices fell at a record pace last month, while Japan's October exports fell at their fastest pace in seven years. The news heightened fears that demand for energy and commodities would slump, sending crude CLc1 down for a fifth consecutive session to below $53, as weaker metal prices put more pressure on miners. BP, Royal Dutch Shell, and Cairn Energy fell between 0.3 and 5.9 percent while miners Eurasian Natural Resources Anglo American and Xstrata lost between 2.1 and 7.1 percent. "We are having a downturn in the UK today after having got back to a sense of relative normality in earlier sessions. Weak data from the U.S. is the main catalyst," said CMC Markets analyst James Hughes. "Commodity and oil prices are really hurting, and miners are so heavily weighted that it's pulling the index down. But we're seeing some better retail sales and that's going to help since they've been under so much pressure lately," he added. UK retailers saw some relief after monthly data showed sales falling less than expected in October despite a decline in discretionary spending. Europe's biggest home improvement firm Kingfisher, clothes and food retailer Marks & Spencer and fashion and homewares store group Next all rose between 2.1 and 4.3 percent after suffering in the previous session. Banks were under pressure after a 23 percent drop in the share price of U.S. banking giant Citi jolted already anxious investors and sent shockwaves through global markets. Barclays fell 2.4 percent, with shareholder discontent over the bank's controversial fundraising plan continuing to dent the stock. HSBC fell 1.5 percent, adding to hefty losses the previous session. Life insurers were down sharply, tracking falls in their U.S. counterparts the previous session with analysts pointing to continued selling by mutual funds. Aviva was the index's heaviest loser, sliding 14.3 percent, while Prudential lost 9.8 percent and Legal & General lost 9 percent. Other financial stocks were also heavy losers with falling equity prices contributing to an 5.8 percent fall for Schroders. Still, the prospect of government bailout money lifted some banking stocks. Royal Bank of Scotland jumped 11.6 percent ahead of a shareholder vote on its plan to raise capital from the UK government while Lloyds TSB gained 8.5 percent, its shareholders having approved on Wednesday a similar plan and its proposed takeover of HBOS. |
Published on 
Tags:
