FTSE falters as financials fall

The blue chip index was lower on Wednesday as financial firms were left vulnerable to eurozone difficulties with the meeting between France and Germany raising more questions than solutions. The FTSE 100 index fell by 0.5 per cent by the close of trade, dropping by just over 26 points to reach 5331.

Chris Bradshaw
shareprices.com - Wednesday, August 17, 2011

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The German Chancellor and French President met on Tuesday to discuss the current crisis in the eurozone and to come up with potential solutions to prevent contagion across the region. However, the idea of reviving the concept of a transaction tax was not well received by investors, with many stocks dropping value at the prospect.

Banks and financial firms weathered some of the heaviest losses with Standard Life the biggest faller with a drop of 5.13 per cent. Also amongst the top 10 biggest losers were Barclays in second place with a fall of 4.21 per cent and Royal Bank of Scotland, fourth, shedding 3.81 per cent. Prudential was in tenth place as 2.44 per cent was wiped off its value.

The potential result of a financial transaction tax would be a drop in the number of trades, which sent interdealer brokers Tullet Prebon and ICAP downwards. Tullet Prebon, a midcap firm, shed 4.2 per cent whilst its fellow FTSE 250 broker IG Group dropped 3.7 per cent. ICAP fell by 3.7 per cent in the FTSE 100.

Miners were higher as demand from Asia strengthened and metal prices rose as the US dollar weakened. Silver miner Fresnillo was the top gainer in the blue chips with a rise of 5.64 per cent whilst Eurasian Natural Resources was in second place with an increase of 3.72 per cent. Eurasian was also boosted by the announcement of its half yearly results which came in at the top end of forecasts.

 

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