- Banks and miners dent the Footsie
- Eurozone concerns dampen sentiment
- Spanish 10-year bond yield at 7.556 per cent
European stocks dropped sharply on Monday morning as concerns about the Eurozone debt crisis provoked fear on equity markets.
London's Footsie lost 1.5% of its value in the opening hour - in line with markets in Paris and Frankfurt - while indices in Milan and Madrid were down nearly 3%.
The German Bundestag voted on Thursday to support Spain's application for EFSF aid for its banks, while the Eurogroup approved the terms of the 'up to €100bn' loan for Spain on Friday. However, Michaela Seimen from Barclays Capital, said this morning: "While last week ended on a more confident note, the market seems to be a bit uncertain this morning in regard to headlines surrounding Spain and Greece."
The focus has now shifted to Spain's regions, after Valencia (and possibly Murcia, according to reports) asked the government for financial help from the newly established support fund. Analyst Craig Erlam from Alpari has said that the finance of the government are "already in doubt" after the nation asked for the a bank bailout.
"With borrowing costs in Madrid hitting euro-era highs on Friday, these requests for aid are likely to spark a full bailout request from Spain. Many in the markets have known this was inevitable for months despite Spain's efforts to resist. The problem now is whether the bailout funds can afford it and if so, what if Italy follows?" Erlam said.
The yield on a 10-year Spanish bond was up 28.9 basis points at 7.556% early on today.
Meanwhile, the International Monetary Fund (IMF) has told the European Union (EU) that it will not provide any additional funds for Greece, according to the German newspaper Der Spiegel.
FTSE 100: Banks, miners suffer from risk aversion
Just one stock, GlaxoSmithKline, was in the blue on the FTSE 100 index, as banks and miners tanked with investors fleeing from risk. Banking groups Royal Bank of Scotland, Lloyds and Barclays were heavy fallers early on, while resource peers Xstrata, ENRC, Kazakhmys, Anglo American, Polymetal and Vedanta also suffered.
Fund manager Aberdeen Asset Management saw assets under management slip 1% in the third quarter, but says that this result was resilient amidst an uncertain environment. Shares edged lower.
Property giant Hammerson fell after seeing net rental income fall 1.6% in the six months to the end of June, though it was up 2.4% on a like-for-like basis.
Water group Pennon was performing relatively well compared with the wider benchmark index, down just 0.3%, after saying it has signed a 25-year waste services contract with Glasgow City Council, a key part of its growth strategy in Scotland.
FTSE 250: Dialight brightens day with half-year results
LED lighting group Dialight was a rare high riser after seeing revenues climb 18.2% and operating profits rise 21% in the half year ended June 30th.
In contrast, mining stocks were firmly lower, in line with their FTSE 100 counterparts, with Aquarius Platinum leading the fallers after it said that the likelihood of industrial action over the South African winter is high. " Aquarius is by no means immune to this threat, and intermittent unlawful industrial action has occurred at one of Kroondal's four shafts in July."
Sector peer African Barrick Gold also fell after proposing to buy up the outstanding share capital of Aviva Mining (Kenya), its first expansion outside Tanzania.
Transport firm Stagecoach advanced after completing its acquisition of Coach America, a bankrupt operator of bus and coach services in the US.
FTSE 100 - Risers
GlaxoSmithKline (GSK) 1,478.00p +0.24%
FTSE 100 - Fallers
Barclays (BARC) 152.00p -4.55%
Aviva (AV.) 283.10p -3.94%
Kazakhmys (KAZ) 677.00p -3.77%
Vedanta Resources (VED) 848.50p -3.63%
Eurasian Natural Resources Corp. (ENRC) 367.50p -3.62%
Lloyds Banking Group (LLOY) 28.86p -3.62%
Anglo American (AAL) 1,958.50p -3.45%
Xstrata (XTA) 812.20p -3.39%
Royal Bank of Scotland Group (RBS) 197.90p -3.32%
Evraz (EVR) 227.00p -3.16%
FTSE 250 - Risers
Dialight (DIA) 1,032.00p +3.51%
Ted Baker (TED) 899.50p +2.22%
KCOM Group (KCOM) 75.50p +1.89%
Millennium & Copthorne Hotels (MLC) 488.90p +1.22%
Marston's (MARS) 109.80p +1.20%
Stagecoach Group (SGC) 289.60p +1.01%
Stobart Group Ltd. (STOB) 119.98p +0.99%
Rank Group (RNK) 117.50p +0.86%
RIT Capital Partners (RCP) 1,261.00p +0.72%
RPS Group (RPS) 226.60p +0.35%
FTSE 250 - Fallers
Aquarius Platinum Ltd. (AQP) 39.40p -7.23%
Kenmare Resources (KMR) 33.11p -5.05%
Morgan Crucible Co (MGCR) 257.50p -4.63%
Afren (AFR) 122.90p -4.51%
JD Sports Fashion (JD.) 693.00p -4.48%
Petropavlovsk (POG) 385.00p -3.87%
African Barrick Gold (ABG) 363.00p -3.82%
Lonmin (LMI) 681.00p -3.75%
Hays (HAS) 69.15p -3.62%
Kentz Corporation Ltd. (KENZ) 390.40p -3.60%