FTSE tumbles below 5,500 mark as Spain edges closer to a full bailout

BRITAIN’S top share index closed back below 5,500 for the first time this month yesterday, with financials among the worst off on Eurozone debt exposure fears as Spain looked to be nearing a full sovereign bailout.

Spain paid the second highest yield on short-term debt since the birth of the euro at an auction yesterday, reflecting the growing belief that the country will need a bailout that the Eurozone can barely afford, with international lenders having already bailed out Greece, Ireland, and Portugal.

Merged airline group IAG was a big blue chip faller, down 2.2 per cent, on concerns over the situation in Spain, with investors worried that hard-pressed Spanish banks will need to sell their big holdings in the firm created by the takeover of Iberia by British Airways.

At the close, the FTSE 100 index was down 34.64 points, or 0.6 per cent, at 5,499.23, having slumped 2.1 per cent on Monday. Volume was 60 per cent of the 90-day daily average.

Commodities trader Glencore was the top blue chip faller in London, down 2.3 per cent as Qatar Holding, the second-largest shareholder in the Swiss-based firm’s takeover target Xstrata, again added to its stake in the miner. Xstrata fell 1.8 per cent.

Chilean copper miner Antofagasta bucked the weaker market and sector trend, adding 1.8 per cent as it appointed a new chief executive.

Chemicals firm Croda International was the top FTSE 100 gainer, jumping 6.1 per cent as it posted a six per cent rise in first-half profit.