Banks hit by latest ratings blow
The FTSE 100 fell this morning with the banking sector pegging back the index as Moody’s threatened to downgrade 17 banks and securities firms and the Greece bailout hit yet more hurdles.
The ratings agency said it might cut the long-term credit rating of UBS, Credit Suisse and Morgan Stanley by as much as three notches following the review.
Among the banks that might be downgraded by two notches are Barclays, BNP Paribas, Credit Agricole, Deutsche Bank, HSBC and Goldman Sachs.
Also casting a shadow over markets were new clashes between Eurozone finance chiefs over Greece’s lifesaving €130bn rescue package.
Finance Minister Evangelos Venizelos said the Greek side had met the final two demands set by the European Union and IMF to seal the deal.
But a government official in Germany said the Greek side still had questions to answer before the payout should be triggered.
The spat threatened to open new wounds in an already damaged relationship.
On London’s blue chip index Barclays edged down by 2.8 per cent, Lloyds 2.5 per cent and RBS 2.1 per cent.
Asia and emerging markets focused Standard Chartered edged down by 0.8 per cent. Also in financial services hedge fund giant Man Group was off by three per cent.
However BAE Systems was the steepest faller after it announced full year profits which were down seven per cent – a drop attributed to the squeeze on UK and US military budgets. The company’s stock was down 4.2 per cent following the results release.
Meanwhile Essar Energy was down more than three per cent having been boosted yesterday by a stock upgrade by Morgan Stanley.
Also in resources miner Evraz was down three per cent in a bleak start to the trading session for the sector
There were few significant gainers in early trading with publisher Reed Elsevier edging up 0.9 per cent and Primark owner Associated British Foods 0.8 per cent.
In Asia the talk of the markets was the arrest of former Olympus executives in connection with fraud allegations at the scandal-hit company.
Olympus shares closed down 2.4 per cent on the Nikkei in an overall market that slipped 0.2 per cent.
Shares in Olympus, currently worth around $4.5bn (£2.8bn), have halved in value since the scandal unfolded.
The Hang Seng ended down 0.4 per cent, as Asia was also hit by continuing instability in the Eurozone.