FTSE remains downbeat on Euro bank and mining tax concerns

The UK’s top index has continued along the same path as the previous session as European banking concerns and reignited fears of a substantial tax on mining profits in Australia has hit the two force sectors and extended the losses made on Tuesday.

Rob Hull
shareprices.com - Wednesday, September 08, 2010

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Miners are in decline on Australian Supertax fears

The FTSE 100 index was dragged back towards the 5,400 marker by the close of London markets yesterday after a strong-rumbling September rebound from a summer of stale activity was brought to an abrupt end from two hard-hitting pieces of news.

Firstly, banking safety was cast back into doubt by a post in the Wall Street Journal that major lenders understated holdings in potentially risky government debt during strength tests on European banks.

And to worsen he blue-chip situation, miners were avoided after Australia’s Labor party won the right to form a minority government, meaning the 30 per cent tax on mining profits is likely to get the go ahead.

Sentiment in both sectors has remaining negative with mining and banking stock dominating the share price losses.

Barclays (LON:BARC) continued heavy losses from the previous session after announcing a new CEO. The share price in the bank is down 3.3 per cent. Royal Bank of Scotland (LON:RBS) is following closely with a decline at the rate of 2.4 per cent and fellow part-nationalised bank Lloyds Banking Group (LON:LLOY) is also down by 1.6 per cent.

HSBC Holdings (LON:HSBA) concluded a poor start to Wednesday for banks, down 1.8 per cent after the bank also announced personnel changes at the firm.

Mining stock in the red is headed by Vedanta Resources (LON:VED) which is seeing its share price decline at the rate of 2.5 per cent.

Eurasian Natural Resources (LON:ENRC) is compounding the downward movement from yesterday with 2.2 per cent losses on Wednesday and both BHP Billiton (LON:BLT) and Kazakhmys (LON:KAZ) are also declining at the rate of two per cent.

Rio Tinto (LON:RIO) is also down by 1.7 per cent despite strong rumours that the heavyweight miner is moving on potential takeover talks with Russian potash producer, Uralki.

Analysts had hoped that industrial output data released at 08:30GMT would improve investor confidence.

However, despite a manufacturing output rise of 0.3 per cent for July confirmed – lifting the annual rate to 4.9 per cent, the highest since December 1994 – the results were very much in line with expectations.

Posting gains in the index is chip-maker ARM Holdings (LON:ARM) after it received an upgrade from UBS that went against the rest of the sector, raising the price tag to 370p from 305p. The share price moved 1.3 per cent higher.

Also in demand this morning are real estate companies after Barclays Capital issued a positive sector outlook and Halifax said house prices had shown signs of improvement.

Hammerson (LON:HMSO), British Land Co (LON:BLND) and Land Securities Group (LON:LAND) all reaped the rewards, adding between 0.5 and 0.8 per cent.

The FTSE 100 is 38 points down at 10:40GMT, declining at the rate of 0.7 per cent with the current value down at 5,370.23.

 

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