FTSE Falls Belows 4,000 Once Again

Brisk selling in New York overnight and the fact that many FTSE 100 constituent companies were going ex-dividend – so that those buying shares would not be eligible for dividend payments, at least not until the second quarter of 2009, or beyond – made it hard work for City traders to keep the leading share index above the 4,000 mark on Wednesday morning.

Michael Parker
shareprices.com - Wednesday, February 18, 2009

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The FTSE 100 did rise slightly in early trading – up 3.35 points to 4,037.48 – but the ex-dividend constituents contributed the equivalent of a 10-point fall which, combined with falls in insurance, energy and mining stocks meant that any progress was short-lived. Indeed by lunchtime on Wednesday the benchmark index had compounded its 100 point loss on Tuesday – which saw it dip briefly below 4,000 points – and was down a further 49 points or 1.2% at 3,984.88. The blue chip index had fallen for five sessions and the latest loss represented a fall of nearly 10% during 2009 to date following a loss of 31% during 2008 as whole.

Insurance and banking stocks were particularly weak, with a few exceptions, as concerns over capital requirements continued. Amlin, Aviva, Legal & General and Prudential were all lower as was Royal Bank of Scotland – reportedly struggling to find £8 billion for subscription to the "toxic asset" insurance scheme proposed by the Government – but Admiral and Lloyds Banking Group bucked the trend and were performing well. This was welcome news for Lloyds Banking Group – now 43% owned by the British taxpayer – as its share prices recovered from a fall on Tuesday as the result of a downgrade of the stock by Moody's.

 

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