Two week low for Britain's FTSE

  • 09/02/2016

By Alistair Smout and Kit Rees

Britain's top share index has fallen to its lowest level in more than two weeks, weighed down by falls in banking stocks to multi-year lows and weakness in the tech sector.

Growth sensitive sectors weighed on the FTSE 100 on Monday as concern over the state of the global economy mounted.

Financial stocks took more than 50 points off the FTSE 100, with the consumer discretionary sector and energy shares combining to take off over another 35 points.

Traders said concerns over bank margins in a negative interest rate environment were hurting the bank sector after central banks in Europe and Japan delivered dovish messages in January.

Worries over a possible British vote to leave the European Union later this year were also weighing.

Emerging market exposed lender HSBC dropped to its lowest level since 2009, while Barclays fell 5.3 percent to its lowest level since 2012.

Shares in Barclays were briefly suspended following volatility in its share price after it dropped eight percent over the course of the session from its level following the opening auction.

"The banks have continued to have a weak start to the year on concerns (over) dividend cuts and weaker EM growth ... We (also) see some concerns on the outlook for Brexit if it occurs," said Atif Latif, director of trading at Guardian Stockbrokers, noting that swings in oil prices also had a big effect on the commodity-heavy FTSE.

After a steadier start, oil prices fell on Monday, with oil and gas stocks hit as US crude dipped below US$30 a barrel.

The FTSE 100 index fell 158.70 points, or 2.7 percent to 5,689.36 points by the close, slightly outperforming the European market.

The index has already lost around 6.5 percent this month, and dropped to its lowest level since January 21.

"This is a down-trending market so, for the time being, that 5900.00 level for the FTSE - we seem to be leaving it behind us now," said Brenda Kelly, head analyst at London Capital Group.

Chip maker ARM Holdings was down 6.4 percent, as Friday's big fall in the US tech sector on continued.

Several brokers reiterated their "neutral" ratings for ARM ahead of its full-year earnings release on Wednesday.

Concerns regarding a slowdown in the US tech sector - after Apple forecast its first revenue drop in 13 years at the end of January - have hit shares of ARM Holdings, whose technology powers Apple's iPhone.

One of only eight gainers, precious metals miner Randgold Resources rose 13.2 percent following a strong set of full-year earnings.

The company said its full-year profit from mining fell by 11 percent, a better-than-expected result given weakness in gold prices in 2015.

However, gold has recovered this year as investors have sought safe havens, and the stock is up around 30 percent this year. A rally in gold fuelled gains again on Monday.

"RRS is one of the few companies to still generate earnings growth, while its investment discipline has left it well placed to withstand the current environment," analysts at Investec said in a note.


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