Pensive movement on FTSE as miners rebound but banks retreat

The UK’s top share index looks set to have a session of unpredictability today as investors continue to pull out of banking, oil and travel stocks but mining sector shares begin to rebound from losses made in the previous two days of trading.

Kate Neilson
shareprices.com - Tuesday, June 08, 2010

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Barclays heads the banking sector decline

The FTSE 100 is showing losses for the third successive day in the opening hours of trading with the banking sector being the biggest influence on the decline.

Banks suffered severe knocks yesterday on two fronts – Friday’s announcement by a Hungarian politician that the country is set to see its economy spiral out of control similarly to Greece and continued fears of a bank-focussed tax to help recover the UK’s deficit. Despite Hungary’s Economy Minister Gyorgy Matolcsy saying the situation wasn’t as bad as the debt problems that have wounded Greece, he did admit the nation had debts of €76bn. And with UK Chancellor George Osborne committing to a bank tax, despite some nations strongly opposing the plan, investors are tiptoeing around banking shares.

Barclays (LON:BARC), RBS (LON:RBS) and Lloyds Banking Group (LON:LLOY) are amongst the top fallers on the blue-chip index this morning shedding between 2.7 per cent and 2.2 per cent.

Also losing out in early trading was financial stocks – mainly insurers. Prudential (LON:PRU) is still feeling the after-effects of an uncomfortable AGM meeting following the failed takeover of Asian insurer AIA. The Pru’s share price dropped 9p to 525p, a decline of 1.7 per cent, and Aviva (LON:AV) has also shed 5p to drop 1.6 per cent.

Another sector facing difficult times is the travel sector – reports have suggested stay-at-home football fans have shown little interest in booking holidays at the start of the season to enjoy the World Cup at their local hostelry. Thomas Cook Group (LON:TCG) and TUI Travel (LON:TT) are both over one per cent down at 10:00BST.

Oil producers are also suffering as BP’s (LON:BP) oil spill dramas continue – at 10:00BST BP’s share price is down over three per cent.

Supermarket operators Tesco (LON:TSCO) and Morrisons (LON:MRW) both announced new management today but both are showing sufficient declines.

The mining sector is showing some signs of rallying as aluminium prices firmed this morning and gold continues to be the investor safety stock with other sectors in decline.

The FTSE 100 index is down 1.7 per cent, shedding 60 points to 5009.84 and looking set to teeter below the 5000 point market.

 

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