FTSE stutters over eurozone downgrade fears

The leading share in the UK was lower on the last session of the week over concerns that Standard & Poor were about to announce the downgrade of several EU countries. By the end of the day, the FTSE 100 had dropped more than 25 points, shedding 0.5 per cent to close at 5636.

Chris Bradshaw
shareprices.com - Monday, January 16, 2012

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Royal Bank of Scotland Group

The market was full of speculation that credit agency S&P was seriously considering the downgrade of several countries – although the Netherlands and Germany would not be affected. There was particular concern about the impact on the recue fund – the European Financial Stability Fund – especially if, as rumoured, France was included in the downgrade.

S & P declined to pass any comment on the rumours when approached.

However, whilst the majority of shares were heading south, banks helped to prop up the index by providing some much-needed strength. Royal Bank of Scotland was the top climber in the sector adding 4.8 per cent, benefitting from a broker boost after announcing restructure plans on Thursday.

However, the retail sector continued to struggle onwards with Tesco one of the biggest casualties again. The supermarket giant dropped a further 2.1 per cent, on top of the huge 16 per cent nosedive seen on Thursday as a result of the profit warning issued, an almost unprecedented step for the UK's leading supermarket.

Another stock suffering from the impact of a profit warning was Invensys. The engineering firm fell by over 19 per cent as investors fled after the company warned that it was having to face higher costs.

 

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