FTSE rattled by European banking fears and Barclays appointment
The impressive September rally looks set to end today with the UK’s top index rattled by a new wave of European banking concerns sparked by a Wall Street Journal article. Barclays (LON:BARC) is the top banking blue-chip decliner of the session so far, down over three per cent, after the group announced a new CEO this morning.
Rob Hull
shareprices.com - Tuesday, September 07, 2010
European banking balance sheets have been the talk of the early hours of trading in London after the Wall Street Journal suggested the recent stress tests carried out on EU banks underestimated holdings of potentially risky government debt.
The claims dropped banks out of favour on the FTSE making them, along with miners,the major sector contributor to the FTSE 100’s losses just after 10:00am in the second session of the week.
The biggest losses have been posted by Barclays with a share price decline of more than three per cent.
The retreat from Barclays has been caused by a mixture of the global banking fears and the announcement of a new CEO at the group.
Bob Diamond, the head of Barclays Capital, will replace John Varley from March next year as the company Chief Executive.
The departure of Varley has come as a shock to many and analysts have already suggested similar movement at rival HSBC Holdings (LON:HSBA), which is trading flat at the moment. Lloyds Banking Group (LON:LLOY) and Royal Bank of Scotland (LON:RBS) cannot boast the same though with both stocks declining in excess of 1.5 per cent.
Miners have also dropped out of favour, mainly due to decisive movement down under with Prime Minister Julia Gillard remaining in power in Australia with Labour getting the backing of two independent MP’s to give the PM a majority to form a government.
Miners were hoping for a Labour dislodging from power with the party plotting a tax on the sector. With Gillard retaining power, a new 30 per cent tax on iron ore and coal mining profits – reduced from 40 per cent initially – is likely to go ahead.
The FTSE 100 fallers charts is littered with mining stock as a result with Eurasian Natural Resources (LON:ENRC) leading the negative charge with a share price loss of 2.4 per cent.
Rio Tinto (LON:RIO) is down 2.3 per cent, Vedanta Resources (LON:VED) is almost two per cent down along with fellow heavyweight firm Xstrata (LON:XTA).
As a whole, the mining sector is 1.7 per cent down on Tuesday.
Two of just a handful of stocks in favour this morning are Invensys (LON:ISYS) and Tullow Oil (LON:TLW) with both being subject to fresh takeover talk.
Engineering firm Invensys, tipped to lose its FTSE 100 status, has been identified as a takeover target in reports this morning. Tullow Oil has also hit headlines in the Financial Times and Daily Mail as a target for US oil giant ExxonMobil.
The pair are are posting share price gains of 4.9 per cent and 2.5 per cent respectively.
The FTSE 100 is declining at a rate of 0.75 per cent at 10:15am, shedding over 41 points to drop below the 5,400 bracket with a current value of 5,397.68.
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