Spanish worry keeps FTSE low

BRITISH blue chips dipped yesterday, edging down towards recent six-month lows as a surge in Spanish bond yields to record highs cast the spotlight back onto the problems in top trading partner the Eurozone.

Uncertainty ahead of Greek elections at the weekend – which may decide whether the country stays in the currency or opts for an exit with unpredictable contagion risks for the rest of Europe – kept investors on edge and on the sidelines.

The FTSE 100 closed down 0.3 per cent, or 16.76 points, at 5,467.05, wiping out its gains from earlier in the week, and just over 200 points above its 1 June trough around 5,230, which was its lowest since late November 2011.

“The truth lies in the performance of the peripheral European bond yields,” said Jeremy Batstone-Carr, strategist at Charles Stanley.

“The UK won’t escape unscathed because we too have a very high debt to GDP ratio.”

Heavyweight miners led the retreat yesterday, as investors fretted about the impact of the crisis on global economic growth and thus demand for metals.

Glencore and Xstrata fell four and two per cent respectively, weighed down by concerns about whether they will be able to pull off a planned merger.

Also among the top fallers was hedge fund manager Man Group, which fell 3.6 percent ahead of its last day in the FTSE on Friday, and BSkyB, which dropped 3.2 per cent.

The satellite broadcaster paid more than expected to broadcast most of the English Premier League soccer matches in a new three-year deal.

Shares in telecoms operator BT, which won the right to show some of the games and competition from which was seen as the reason for the higher price tag, fell 3.3 per cent.