The London Report
FTSE 100 hits one-month low as Greek deficit fears weigh
BRITAIN’S top shares fell to a one-month closing low yesterday after news that Greece’s deficit widened more than expected hit investor sentiment, sending commodity and bank stocks into reverse.
A downgrade of Greece’s debt rating from Moody’s Investors Service added to investor worries.
“The Volatility Index, the markets’ key gauge of investor fear, has rallied ... underlining the nervousness that investors are feeling right now that the markets could be due some consolidation,” said Joshua Raymond, market strategist at City Index.
The CBOE Volatility Index, Wall Street’s favourite fear gauge, rose 6.6 per cent. The higher the index, the lower the risk appetite is for investors.
Commodity prices shed early gains as investors piled into the traditional safe-haven of the greenback and shied away from raw materials, fretting over the impact on demand.
Miners Fresnillo, Lonmin, ENRC and Kazakhmys were off 2.1 to 2.5 per cent.
Crude fell as oil demand was seen slipping, with Royal Dutch Shell, BP and BG Group falling 1.1 to 1.8 per cent.
The banking sector, which has been volatile with uncertainty over regulation and exposure after fraud charges were levelled against US giant Goldman Sachs, swung into negative territory.
HSBC, Barclays, Standard Chartered, Lloyds Banking Group and Royal Bank of Scotland were down 0.4 to 1.7 per cent.
Vodafone was a top weighted faller, down 1.7 per cent with the market and after Verizon Communications said its Verizon Wireless venture with the UK firm added just 423,000 postpaid customers in the first quarter, well below the average expectation.
Mall owner Liberty International dropped 3.3 per cent after a Morgan Stanley downgrade ahead of a proposed demerger.
Chipmaker ARM rose 3.4 per cent, topping the FTSE 100 risers’ list and extending Wednesday’s gains, on rumours in the previous session of possible interest from larger suitors and blockbuster results from Apple.
Food producers were boosted by upbeat broker comment and after Nestle, the world’s biggest food group, beat forecasts with first-quarter sales.
Unilever rose 1.1 per cent as Panmure Gordon upped the consumer goods group to “buy” from “hold”. Elsewhere, Intertek gained 1.9 per cent after JPMorgan upgraded the testing company to “overweight”. Autonomy climbed 2.9 per cent.