FTSE close: Barclays, RBS fall on Spain fears

By Ed Monk for Thisismoney.co.uk
Updated:

 

17.10 (close)

Dealers monitor their screens on the trading floor of IG Index in London

Down to earth: Shares fall after a high yesterday.

Falls among blue chip banks pulled the FTSE 100 Index into negative territory today after warnings of a possible ratings downgrade for debt-laden Spain.

Barclays led the sector lower - down 4% - on fears over its exposure to Spain following a move by Moody's to put the country's credit rating under review.

Despite a late session boost from Wall Street after positive US manufacturing data, the Footsie still closed in the red, off nine points to 5882.2.

The Dow Jones was up 0.3% after the Federal Reserve announced factory output rose 0.3% in November, its fifth successive monthly rise.

This buoyed the FTSE 100 briefly, but it failed to maintain gains - ending the rally that yesterday saw the top tier hit its highest close for two-and-a-half years.

Sentiment was not helped by less cheery economic news as figures revealed UK unemployment climbed to 2.5m in the quarter to October.

This sent the pound down sharply, 1% lower at $1.56 and 0.6% down at 1.17 euros.

Barclays was down 10p to 262p as investors fretted over its exposure to Spain's economy after the gloomy Moody's report.

The credit ratings agency may downgrade Spain's debt because of the country's high financing needs in 2011 and its shaky banking sector, fuelling worries over the sovereign debt exposure of UK banks, with Barclays seen as being one of the most exposed.

Other banks also suffered as HSBC dropped 10.6p to 661.1p, part-nationalised Royal Bank of Scotland lost 0.6p to 40.8p and Lloyds Banking Group declined 0.8p to 68.5p.

The biggest rise in the top flight came from Lakeside shopping centre owner Capital, which climbed 5% or 19.3p to 415.6p after US firm Simon Property Group wrote to the company outlining its plans for a £2.9bn takeover.

Capital's board rejected the proposal and adjourned the vote on the proposed takeover of the Trafford Centre in Manchester from Monday to early next year.

Outside the top flight, the rapid ascent for shares in fashion firm Supergroup juddered to a halt after the company posted maiden interim results.

Half-year profits rose 68%, but shares slumped 11% after the Superdry owner warned rising raw material prices could hit earnings next year. Shares fell 178p to 1450p.

Elsewhere, Spode and Royal Worcester ceramics group Portmeirion soared 14% or 60p to 495p after it said demand from overseas buyers would ensure 2010 was a record year for sales.

Seymour Pierce analysts raised 2010 profit forecasts from £4.5m to £5m on the back of Portmeirion's bullish trading update.

The biggest Footsie risers were Capital Shopping Centres up 19.3p to 415.6p, Autonomy Corporation ahead 68p to 1475p, Rexam up 11.7p to 322.6p and Experian up 21p to 812.5p.

The biggest Footsie fallers were Barclays down 10p to 262p, Fresnillo off 40p to 1555p, British Airways down 5.6p to 272.4p and Randgold Resources down 115p to 5655p.

16.10: The Footsie has edged into the black just before the end of the trading day, up 5.32 points at 5,896.53.

The reversal in fortune came as the Dow Jones shrugged off its uncertain start. US investors are digesting better-than-expected manufacturing and industrial data, which appears to signal the recovery across the Atlantic is firmer than previously supposed.

The Dow is trading 40.8 points higher at 11517.34.

15.45:

With the close in sight, the FTSE 100 is staging a late comeback.

The blue-chip index is now just 0.97 points down at 5890.24 - within a whisker of setting another two-and-a-half year high.

14.45:

The Dow Jones in New York is trading modestly higher shortly after the open, up 15.33 points at 11491.87. Eurozone debt worries are weighing on the index despite the release of improved US industrial production data.

The FTSE 100 is still in the red, down 13.44 points at 5,877.77.

13.00:

A lunchtime update - the FTSE 100 is 19.94 points lower at 5871.27.

Banks, and Barclays in particular, have suffered after credit ratings agency Moody's spooked markets when it said it may downgrade Spain's debt because of the country's high financing needs in 2011 and its shaky banking sector.

Barclays shares have fallen 8p to 264.1p, while HSBC dropped 5.3p to 666.4p and Royal Bank of Scotland shed 0.3p to 41.1p.

The pound is slightly off today after unemployment climbed 35,000.

The pound is at $1.5702 compared to $1.5787 at the previous close.

11.10:

The key economic news today concerns jobs. Unemployment is on the rise again, according to the ONS.

The jobless total climbed 35,000 to 2.5m - a rate of 7.9%, the highest since the start of the year.

The pound dropped over half a cent on the news, to $1.569.

In corporate news, fashion sales sensation Superdry helped parent firm Supergroup to raise profits by 68% for the past six months. However, the shares are a whopping 258p, or 16%, lower today at 1,370p.

The FTSE is 27.46 points lower at 5863.75.

10.00:

The FTSE is struggling to hang to the two-and-a-half year high from yesterday, with banks lower on gloomy news from Spain.

The London market's pre-Christmas rally ran out of steam as the Footsie fell back from last night's highest close since June 2008.

With little corporate and economic news to drive buying interest, the top flight index surrendered yesterday's gains to stand 23.9 points lower at 5867.1.

One reason for the poor session was a warning from credit ratings agency Moody's that it may downgrade Spain's debt because of the country's high financing needs in 2011 and its shaky banking sector.

This fuelled worries over the sovereign debt exposure of UK banks as Barclays fell 7.65p to 264.35p and Royal Bank of Scotland dropped 0.4p to 41p.

The biggest rise in the top flight came from Lakeside shopping centre owner Capital, which climbed 3% or 10.8p to 407.1p after US firm Simon Property Group wrote to the company outlining its plans for a £2.9 billion takeover.

The move is likely to add to pressure on Capital's shareholders to veto the UK's firm plans for the takeover of the Trafford Centre in Manchester.

Outside the top flight, the rapid ascent for shares in fashion firm Supergroup juddered to a halt after the company posted maiden interim results.

Profits rose 68% but shares slumped 16% after the Superdry owner warned rising raw material prices could hit earnings next year. Shares fell 265p to 1363p, taking the stock back to the level seen in late October. On Wall Street later, the futures markets expect the Dow to open lower.

In currency, the pound was at $1.5749 compared to $1.5787 at the previous close, while against the euro the pound was worth €1.1809 compared to €1.1791 at the previous close.

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