Heavy losses for UK banking stocks
Banking stocks suffered more heavy losses today as the latest wave of market turmoil wiped another 2.5% from the value of the FTSE 100 Index.
Recession fears and speculation of a short-term funding crisis in the European banking system ensured the top flight index remained under pressure after losing £62bn or 4.5% yesterday.
The FTSE 100 fell as low as 4929.5 before steadying later in the session to stand 129 points lower at 4963.1. Traders were braced for another slump in the Dow Jones Industrial Average after it closed more than 3% lower last night.
IG Index sales trader Ben Critchley said: “Fears of a global double-dip recession have sent markets into meltdown, and in many traders’ minds the weekend cannot come soon enough.”
Banking stocks were at a two-year low with Lloyds Banking Group down 6% or 1.7p at 28.1p, Barclays off 4% or 6.37p at 147.7p and Royal Bank of Scotland 1.2p lower at 20.7p.
Other big fallers in the top flight included Aberdeen-based oil services firm Wood after it was the subject of a downgrade by broker JP Morgan Cazenove. Shares were 5% lower, off 26.25p to 500.25p.
The economic fears put further pressure on oil prices, with Brent crude down to 105 US dollars a barrel. BP was down 3% or 12.90p to 387.25p while Royal Dutch Shell fell 72.75p to 1851p.
And with investors retreating into safer havens such as gold, the share price performance of Randgold Resources continued to improve, up 25p at 6440p.
The only other ray of light for investors came from the technology sector after last night’s announcement that Hewlett-Packard planned to buy software firm Autonomy in a £7.1bn deal.
If the takeover is approved by shareholders, founder Dr Mike Lynch will realise more than £500m from his 8% stake in Autonomy, although he has agreed to remain at the helm of the business.
Autonomy shares jumped 74% or 1058.5p to 2487.5p, while the latest consolidation moves in the sector caused chip designer Arm Holdings to rise by 6.5p to 485.2p and software firm Misys to lift by 10.6p to 246.3p.
There was also a rally for transport group Stagecoach after the company unveiled its second huge cash handout for shareholders in four years. The £340m payout, which will mean a windfall of £51m for chief executive and founder Brian Souter, caused shares to lift 6.1p to 238p.
