Friday February 20, 11:58 AM
Glance-Jitters drag FTSE to 3-month low, commodities sink
By Simon Falush
LONDON, Feb 20 (Reuters) - Growing anxiety about the state
of the financial sector and deepening gloom on the global
economy sent banks and miners skidding lower on Friday, dragging
Britain's top share index down 2.5 percent to a three-month low.
By 1130 GMT the FTSE 100 was down 101.51 points at
3,916.86 after rising 0.3 percent the previous session. It
earlier hit its lowest level since November 24 and is down 11.4
percent this year after falling more than 31 percent in 2008.
Intensifying concerns about the ailing global economy hurt
the demand outlook, weighing heavily on heavyweight miners and
energy stocks.
BP (LSE: BP.L - news) , Royal Dutch Shell (LSE: RDSB.L - news) and Cairn Energy (LSE: CNE.L - news) fell between 1.2 and 3.3 percent while Xstrata (LSE: XTA.L - news) ,
Rio Tinto (LSE: RIO.L - news) and Kazakhmys (LSE: KAZ.L - news) lost 6.8-7.7 percent.
Anglo American (LSE: AAL.L - news) was the heaviest blue-chip loser, off
13.5 percent after it scrapped its 2008 dividend and said it
will cut 19,000 jobs.
In New York, the Dow Jones Industrial Average ended
at a more than six-year low on Thursday, while Japan's Topix fell to its lowest level in 25 years as risk aversion
gripped nervous investors globally.
'It's a follow through from the U.S. last night where the
financials fell... and mining stocks are weak too with Anglo
American and Rio Tinto under pressure,' said Jonathan Jackson,
head of equities at Killik & Co.
Banks were also among the heaviest fallers as investors
fretted once again about the threat of nationalisation that the
sector faces.
'We're going through one of those phases where the market
corrects itself. No sooner does the European market decide where
it wants to be than the U.S. and Asian markets fall,' said Peter
Dixon, UK economist at Commerzbank
Royal Bank of Scotland (LSE: RBS.L - news) , HSBC (LSE: HSBA.L - news) , Lloyds
Banking Group and Standard Chartered (LSE: STAN.L - news) fell up
to 4.7 percent.
'The market is falling because it is getting in tune with
reality. It's a reflection of the deterioration in the global
economy and the impact that will have on earnings, which is why
this downturn has some way to go,' Dixon said.
Equity investors took little solace from an unexpected rise
in January retail sales, though the pound rallied on the news .
In his final speech before stepping down, John Gieve, the
Bank of England's deputy governor, said the government should
consider imposing caps on the amount mortgage companies can lend
to homebuyers, The Daily Telegraph newspaper reported.
Insurer Prudential was one of three blue-chip stocks
in positive territory, up 10.8 percent after it said it will
sell the bulk of its business in Taiwan to China Life.
(Reporting by Simon Falush; editing by Dan Lalor)
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