BRITAIN’S leading shares tumbled yesterday, laid low by big falls from banks and commodity issues as ongoing euro zone debt contagion fears and rising tensions in Korea kept investors wary.
By the close, the FTSE 100 index was down 128.93 points, or 2.5 per cent, at 4,940.68, having touched an eight-and-a-half month low of 4,898.49 early in the session.
British blue chips have fallen by over 15 per cent since fears escalated about the euro zone sovereign debt crisis in mid-April, with benchmark UK stock valuations at their lowest level in 10 months, at 11.43 times reported earnings.
Banks were the biggest drag on blue chip sentiment as jittery investors feared southern Europe’s sovereign debt problems could derail the global economic recovery.
Lloyds Banking Group, Royal Bank of Scotland, Barclays, HSBC, and Standard Chartered shed 1.8 to 8.9 per cent.
Confidence in the sector took a knock as investors fretted over how deep the debt issue could run after Spain’s central bank bailed out regional bank CajaSur on Saturday.
Increased tensions between North and South Korea also heightened market caution.
“There is just no good news out there.” said Mic Mills, senior trader at ETX Capital. “The euro zone debt concerns knock us one way, then Korea comes back to punch us the other.”
Miners suffered as metal prices retreated on demand concerns, with Eurasian Natural Resources, Antofagasta, Vedanta Resources, Rio Tinto, and Xstrata losing 3.5 to 7.1 per cent. Oil majors also fell back as crude prices lost ground.