FTSE tumbles as brokers urge caution

The top share index in the UK was lower again on Wednesday as brokers urged investors to take a careful look at banking stocks. The FTSE 100 fell by 0.5 per cent, dropping nearly 29 points to close at 5723.

Chris Bradshaw
shareprices.com - Wednesday, January 25, 2012

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Barclays

Despite falling away from the six month peak seen at the beginning of the week the bluechips managed to cling on above the key level of 5700 which it had struggled for so long to challenge. But broker comments were the main downward pressure on the index at the midpoint in the week after downgrading some of the banking firms and warning that recent highs may not be sustainable.

The banking sector has shot up by around 15 per cent so far in 2012, far outperforming the benchmark of around 3 per cent. RBS was one of the casualties of the day shedding 1.1 per cent as it suffered a downgrade from multiple brokers. Its sector peers Barclays and Lloyds were also on the back foot losing 0.5 and 2.3 per cent as brokers recommended that investors take their profits.

Banks were not the only stocks to feel the impact of negative broker comments, as both BP and Royal Dutch Shell tumbled, dropping 0.6 and 1.6 per cent over their earnings estimate was slashed.

Vodafone was another firm struggling with its earnings forecast as its business partner Verizon announced that it could miss its target for 2012, sending the mobile telecoms giant lower by 1.0 per cent.

It was bad news in the retail sector too as margins and earnings were under review, with the expectation that consumers will be squeezed further in 2012 leading to a drop in spending. Marks and Spencer lost 0.5 per cent whilst Tesco shed 2.1 per cent on the back of speculation.

 

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