FTSE down again as banks struggle to reverse fall
Confusion over whether S&P had issued a new, and downbeat, report on the UK banking system freaked the markets on Thursday
The FTSE 100 index shed another 71.7 points or 1.4% to close at 5,145--the UK benchmark has lost just over 3% so far this week—and the FTSE 250 index lost 31.5 points or 0.3% to 9,213.8.
The cause of the market turnaround were newswire reports that Standard & Poor’s had stated “We no longer classify the United Kingdom … among the most stable and low-risk banking systems globally” but the ratings agency subsequently insisted this statement was taken from an old report. Still, the damage was done and London-listed banks went from morning gainers to afternoon losers in one fell swoop: Standard Chartered, Royal Bank of Scotland and Barclays closed down 2.6%, 1.3% and 0.7%, respectively.
The heaviest index fallers were miners, however, as the price of raw materials continued their recent decline on the back of more weak data from the US, which had the effect of refuelling fears that the economic recovery may be more arduous than hoped. Xstrata, Antofagasta and Anglo American were among the main casualties, 3.3%-4.3% lower each.
It was a similar story for FTSE blue-chip Royal Dutch Shell, which slipped 2.4% lower—a substantial fall for a company with a market cap of near £45 billion—tracking the price of oil.
US jobless claims fell 8,000 to 470,000 last week, versus the consensus 450,000 claims. The decrease, while not as strong as expected, was still welcome after the prior week's surprise increase in claims. US durable goods orders also came in below expectations, rising just 0.3% compared to the anticipated 2% increase.
The greatest FTSE 100 casualty was pharma giant AstraZeneca, which dropped 4.6% after missing fourth-quarter earnings expectations and issuing a downbeat outlook for 2010. Peers GlaxoSmithKline and Shire lost 1.6% and 0.8% apiece. Read our take on Astra's results and guidance here.
