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Weaker banks, commodities push FTSE lower

Weaker banks, commodities push FTSE lower
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First Published: Mon, Apr 19 2010. 02 31 PM IST
Updated: Mon, Apr 19 2010. 02 31 PM IST
London: Weakness from some banks, dented by fraud charges against Goldman Sachs, pushed Britain’s top share index lower in early trade on Monday, while British Airways slid with flights still grounded by volcanic ash.
By 0835 GMT the FTSE 100 was down 17.96 points at 5,726.00 after it fell 1.4% on Friday.
Banks were the biggest drag on the blue chips early on, extending Friday’s sharp decline, weighed down by falls from global player HSBC, off 1.3%, while Standard Chartered fell 1.3%.
Goldman Sachs shares dropped on Friday after the US bank was charged with fraud in the structuring and marketing of a debt product tied to subprime mortgages.
Investors were unsettled by worries the move could increase the chances of tougher reform of financial regulations, with the case seized on by politicians in the US and Europe as a reason for closer scrutiny or tighter rules for banks.
“The shock of Friday’s news about Goldman Sachs is still reverberating and hitting the wider banking sector,” said Keith Bowman equity strategist at Hargreaves Lansdown.
But some of the banks proved resilient as investors awaited more clues on the outlook for the sector from Citigroup results , which are due for release at 1030 GMT.
Royal Bank of Scotland, which is majority-owned by the British government took on 4.5%, the top blue chip riser, adding to gains it made on Friday when BofA Merrill Lynch hiked its target price and added the stock to its Europe 1 investment list.
Lloyds Banking Group, also partly state-owned added 1.2%, and Barclays added 0.2%.
Airlines and travel companies were the heaviest losers as a huge ash cloud from an Icelandic volcano kept airspace over Europe closed for a fifth day.
British Airways, Thomas Cook and TUI Travel fell 3 to 3.5%, while mid cap easyJet fell 3.6%.
The travel freeze has had a knock-on effect on demand for raw materials with crude falling to below $82 per barrel and metal prices broadly weaker.
BP, BG Group and Royal Dutch Shell fell 0.1 to 0.5%.
Miners Xstrata, Lonmin, Kazakhmys, Antofagasta and BHP Billiton shed 0.3 to 1.7%.
On the upside, defensive stocks gained ground as investors moved into companies perceived as relatively immune to increases in risk aversion.
Imperial Tobacco and British American Tobacco gained 0.4 and 0.6% respectively.
BT Group was a big riser, up 1.9% after JPMorgan upgraded its rating for the telecoms operator to “overweight” from “neutral”, saying operational momentum was underappreciated and pension concerns overdone.
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First Published: Mon, Apr 19 2010. 02 31 PM IST