FTSE deep in the red
The FTSE 100 Index closed deep in the red today after banking stocks nosedived on renewed fears over the impact of the credit crunch.
Embattled banks led the FTSE 100 Index 135.5 points lower to 6586.1 – a drop of more than 2%.
The Footsie mirrored falls in the US, with the Dow Jones Industrial Average shedding more than 200 points in morning trading as a downgrade for Citigroup sparked fears of a dividend cut from the firm.
Inflation concerns on soaring oil prices and a continuing weakness in the dollar added to investor nervousness.
Meanwhile, traders also digested news that American consumers, battered by a steep downturn in housing and a severe credit squeeze, slowed spending growth in September to the weakest performance in three months.
In London, crisis-struck Northern Rock took the brunt of the falls, down 7%, or 12.5p, to 172p. Barclays followed with a 5% drop, losing 32.5p to 571.5p.
Mortgage bank Alliance & Leicester and NatWest parent Royal Bank of Scotland also suffered, off 38.5p to 752p and 17.75p to 498.75p respectively.
Other heavyweight fallers included Smith & Nephew, off 32p at 617.5p, after third quarter results from the medical devices firm left some investors disappointed.
Consumer goods giant Unilever moved in the opposite direction after it said it had been successful in passing on higher commodity costs.
With investors cheered by better-than-expected third quarter sales, Unilever shares strengthened by more than 4%, or 71p to 1696p.
Many of the risers from a strong session yesterday were on the fallers board, including Taylor Wimpey after a 6% rise in its previous session.
Shares today were off 4% or 9.5p at 238p, reflecting a weaker session for housebuilders in general. Barratt Developments dipped 27.5p to 625p and Persimmon fell 39p to 1010p.
The cost of crude rose above 96 US dollars a barrel in Asian trading on the New York Mercantile Exchange as a surprise drop in US crude stockpiles raised concerns about supplies over the winter.
But London’s oil majors failed to benefit after US peer Exxon Mobil posted third quarter earnings that missed expectations with a decline of 10%. BP shares were off 6.5p at 618.5p while Royal Dutch Shell fell 47p to 2048p.
Natural gas producer BG Group spent much of the session in positive territory as analysts said strong trading in liquid natural gas, as seen in third quarter results today, may stir takeover interest. The stock was later 8.5p lower at 881p.
Elsewhere, shares in Domino’s Pizza slumped 10% as it said the cost of mozzarella had rocketed by more than £1,000 a tonne since June after it was forced to switch suppliers at a time when dairy product prices have been rising. The company has been forced to shoulder some of the increase itself, meaning shares slid 23.75p to 216p.
The biggest Footsie risers were Unilever up 71p at 1696p, BSkyB up 9.5p at 690p, ICAP ahead 6p at 591p and Associated British Foods up 9p at 921p.
The biggest Footsie fallers were Northern Rock down 12.5p at 172p, Barclays off 32.5p at 571.5p, Smith & Nephew down 32p at 617.5p and Alliance & Leicester down 38.5p at 752p.
