FTSE dives as bank and energy stocks weaken on US economy fears

The UK’s top index has continued the downward trend started late on in the previous session with banks and energy stock suffering the most from reignited concerns about the US economy after the Federal Reserve released a monetary policy statement overnight. Despite the central bank confirming interest rates would remain unchanged, as predicted; investors were made more wary by the strategies to pump more money into the economy.

Rob Hull
shareprices.com - Wednesday, September 22, 2010

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Banks are out of favour on Wednesday

At 09:30GMT, the FTSE 100 is 53 points down, falling by one per cent to 5,523.09.

The biggest blue-chip anchors of the session so far have been banks, in light of global economy concerns returning, and energy stocks, which have lost ground made in the previous two session of the week.

Wall Street reacted kindly to the report with stocks spiking soon after the statement release. However, with economic data seemingly signalling an improved recovery, investors were downbeat about the less-than-encouraging outlook statement. US stocks shifted down by the end of Tuesday closing the session flat.

And it was a similar reaction in London as the markets opened with investors less than overwhelmed by the restricted outlook from the Federal Reserve and the lack of information about how demand would be improved across the Atlantic.

With risk appetite falling over economy unease, banks have been the major influence on the FTSE’s downward turnaround.

Part-nationalised Lloyds Banking Group (LON:LLOY) and Royal Bank of Scotland (LON:RBS) are experiencing the worst sell offs, losing over 2.1 per cent of their share prices.

Barclays (LON:BARC) and HSBC Holdings (LON:HSBA) have backtracked into negative share price territory at the rate of more than one per cent, and Standard Chartered (LON:STAN) has lost much of the gains it made early yesterday after the sector received a boost from a number of upgrades.

Energy stocks, which have been the real force behind strong FTSE 100 gains in recent session, are out of favour with demand concerns weighing on the sector and many stocks appearing overweight following an investor surge towards oil producers after a raft of positive releases.

BP (LON:BP), which has been an investor favourite after it confirmed on Sunday it had permanently stopped oil leaking from the damaged well in the Gulf of Mexico, is 1.3 per cent down, BG Group (LON:BG) has shed over one per cent of its share price and Royal Dutch Shell (LON:RDSA) is declining at the rate of 0.8 per cent.

Tullow Oil (LON:TLW) is the biggest faller, losing 1.6 per cent of its share price while Cairn Energy (LON:CNE) is gaining by 0.5 per cent after it said yesterday it found evidence of oil at a project location based in Greenland.

At the opposite end of the scale, gold miners are back in favour with prices hitting all-time record prices again today.

Randgold Resources (LON:RRS) is the top performing FTSE 100 stock, up 2.1 per cent. And fellow gold miner African Barrick Gold (LON:ABG) is also up by two per cent with precious metal counterpart Fresnillo (LON:FRES) adding 1.3 per cent to its share price.

Base metal prices also improved, pushing mining stock higher with Xstrata (LON:XTA), BHP Billiton (LON:BLT), Antofagasta (LON:ANTO), Rio Tinto (LON:RIO) and Lonmin (LON:LMI) all in the region of one per cent improvements.

 

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