LONDON (ShareCast) - - Spain downgraded by Fitch
- Bernanke comments weigh on markets
- Investors nervous ahead of Chinese data this weekend
- Spain denies rumours of imminent bank bail-out petition

Blue chips were off their intraday lows but still firmly in the red by Friday lunchtime as concerns over Spain continued to dampen the mood.

Spain and the European Union has denied reports of an imminent petition by Spain for bank rescue funds. According to earlier reports, Eurogroup finance ministers were to hold a conference call tomorrow to discuss the details and issue a statement thereafter.

Fitch Ratings said last night that the "likely 'fiscal cost'" of restructuring and recapitalising the Spanish banking sector would be between €60bn and €100bn in a worst-case scenario. This came as the ratings agency downgraded its sovereign debt rating for the country from A to BBB.

Also weighing on sentiment today were yesterday's comments from Federal Reserve Chairman Ben Bernanke who "performed his usual trick of depressing the markets", according to Craig Erlam from Alpari. Analysts were hoping for hints of imminent stimulus measures but Bernanke failed to say whether the Fed would be embarking on QE3 any time soon.

Investors will still be digesting the recent interest rate cut from China, which initially spurred impressive gains for equity markets on Thursday. However, ahead of some key inflation and industrial production figures due out this weekend from the world's second-largest economy, some analysts are questioning whether the rate cut was a pre-emptive move ahead of what could be some disappointing data.

In other news, German exports decreased for the first time this year in April, falling 1.7% from March. Producer prices in the UK came in below expectations in May, showing an 0.2% month-on-month drop (consensus: +0.1%) in factory gate inflation, while input prices fell by 2.5% month-on-month (consensus: -1.6%).

FTSE 100: Resources out of favour as commodity prices drop

Metals prices were retreating on Friday morning, pressuring mining stock lower: Vedanta, Kazakhmys, Antofagasta, Xstrata, Rio Tinto, Glencore and ENRC were among the worst performers. A stronger dollar was making greenback-denominated commodities more expensive early on with crude prices also taking a tumble, denting the likes of Tullow Oil and BP.

BHP Billiton was among the fallers after Bank of America Merrill-Lynch reduced its profit forecasts for the group on the back of lower oil prices estimates. A hold recommendation was maintained.

Power systems group Rolls-Royce fell after announcing that it is to take full control of Aero Engine Controls (AEC), the engine controls joint venture it established in January 2009 with US aerospace giant Goodrich.

Heading the other way was the defensive utilities sector as investors fled from risk and into 'safer' assets, including Severn Trent, Centrica, United Utilities, SSE and National Grid.

FTSE 250: Lamprell plummets after profit warning

Energy markets-focused engineer Lamprell was battered after sneaking out a profit warning on Thursday after the London market closed, saying that it now expects to make a half-year loss of between $15m and $20m, compared with earlier guidance of "a small loss". The group also said that Chairman Jonathan Silver would step down.

"We continue to believe that management’s credibility has fundamentally deteriorated," Nomura said in a research note this morning.

Budget airline easyJet edged higher after revealing that passenger numbers in May were 14.4% higher than a year ago. Traffic has been steadily increasing since February.



FTSE 100 - Risers
Capita (CPI) 645.00p +2.14%
Severn Trent (SVT) 1,759.00p +1.38%
Diageo (DGE) 1,595.50p +1.17%
Centrica (CNA) 311.60p +1.04%
United Utilities Group (UU.) 675.00p +0.97%
Next (NXT) 3,050.00p +0.93%
Reckitt Benckiser Group (RB.) 3,486.00p +0.87%
Shire Plc (SHP) 1,867.00p +0.86%
GlaxoSmithKline (GSK) 1,439.50p +0.66%
National Grid (NG.) 657.50p +0.61%

FTSE 100 - Fallers
Vedanta Resources (VED) 932.50p -5.38%
Rio Tinto (RIO) 2,865.00p -4.98%
Eurasian Natural Resources Corp. (ENRC) 421.90p -4.37%
Evraz (EVR) 276.40p -4.16%
Kazakhmys (KAZ) 699.00p -3.98%
BHP Billiton (BLT) 1,753.00p -3.68%
Anglo American (AAL) 2,055.50p -3.63%
Petrofac Ltd. (PFC) 1,530.00p -2.98%
Barclays (BARC) 187.35p -2.85%
Xstrata (XTA) 943.30p -2.43%

FTSE 250 - Risers
Bumi (BUMI) 358.00p +9.78%
RPS Group (RPS) 206.00p +4.57%
Atkins (WS) (ATK) 682.00p +4.36%
Kier Group (KIE) 1,256.00p +2.11%
Grainger (GRI) 89.00p +1.83%
New World Resources A Shares (NWR) 318.60p +1.79%
Synergy Health (SYR) 880.00p +1.79%
Brown (N.) Group (BWNG) 232.50p +1.48%
PayPoint (PAY) 712.50p +1.28%
Bellway (BWY) 753.50p +1.28%

FTSE 250 - Fallers
Lamprell (LAM) 83.40p -23.28%
Kesa Electricals (KESA) 49.49p -8.52%
Afren (AFR) 110.60p -5.63%
Anglo Pacific Group (APF) 238.80p -5.50%
Essar Energy (ESSR) 118.10p -4.99%
Lonmin (LMI) 755.50p -4.61%
Heritage Oil (HOIL) 121.50p -4.56%
Home Retail Group (HOME) 70.70p -4.27%
Hays (HAS) 72.30p -3.66%
Investec (INVP) 338.80p -3.61%

BC

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