Triple dose of bad news sends FTSE downards

A downgrade for Spain’s credit rating, violence in Libya and weak data from China and the US heaped pressure on Britain’s top share index yesterday, with traders speculating that there could be more woe to come.

“It’s an unholy triumvirate of bad news,” Chris Purdy, trader at Spreadex, said.

Purdy pointed to the three-month low of 5,795 as the next significant support level as the FTSE 100 closed down 92.01 points, or 1.6 per cent, at 5,845.29, a fresh year low.

He said the index had plunged through the support barriers he was expecting and it was anyone's guess how much further the sell-off might go.

London’s blue-chip index also fell below 5,881, the 38.2 per cent Fibonacci retracement from the 30 November low to the late February high. But it bounced off 5,833.23, with the next key retracement level -- 50 per cent -- at 5,812.

Banks were weaker as risk appetite remained off the menu for investors after Moody’s cut Spain’s sovereign credit rating a notch to Aa2 and warned of further cuts.

Barclays, which has a big exposure to Iberian debt, fell 1.3 per cent.

The Bank of England’s Monetary Policy Committee kept interest rates at a record low of 0.5 per cent, but traders noted sentiment on the committee is shifting.

“(The) announcement was perhaps taken for granted, but after minutes showed another policymaker shifting camps last month, with three now favouring a rate hike (and one for 50bps), this could be the last of the low rates,” Spreadex’s Purdy said.

Brent crude traded above $114 a barrel, as military activity intensified in Libya.

Miners fell with base metal prices.