Refreshed Eurozone debt concerns hit banks and bruises FTSE

The FTSE 100 is set to decline for the second successive session today after blue-chip banks were hit by a new wave of Eurozone debt fears sparked by concerns sounding from Hungary on Friday. Disappointing job data from the U.S. did nothing to stabilise the market and metal prices dropped dragging mining stock down, too.

Rob Hull
shareprices.com - Monday, June 07, 2010

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Lloyds Banking Group is the biggest blue-chip faller in early trading

The UK’s top index has been teetering above the 5000 point marker this morning, influenced mostly by the state of the Hungarian economy.

The Hungarian Government announced on Friday that the country may suffer from a similar debt crisis that crippled the Greek economy.

Peter Szijjarto, a spokesman for Hungary’s Prime Minister Viktor Orban, said Hungary’s economy was in ‘very grave danger’ due to the previous government manipulating official data.

The news pushed eurozone debt concerns back to the forefront and reports that Finance Minister George Osborne plans to slap a grave new tax on banks has hammered banking stock.

The FTSE 100 sell-off has been headed by Lloyds Banking Group (LON:LLOY) and Royal Bank of Scotland (LON:RBS).

Lloyds has been the most active stock so far this morning, falling 4.6 per cent at times in the opening two hours of trading.

And RBS is following closely in terms of both activity and declines, losing over 2p to drop 4.8 per cent.

Barclays (LON:BARC) is also down more than four per cent before 10:00BST.

Weak miners also accounted for a the blue-chip index decline as base metal prices dropped on demand concerns following the disappointing job data released by the U.S. and the increased eurozone debt speculation.

Kazakhmys (LON:KAZ) was the biggest faller, dropping as much as 5.3 per cent in the opening minutes of trading.

Xstrata (LON:XTA) has posted declines on over four per cent along with Rio Tinto (LON:RIO) and Eurasian Natural Resources (LON:ENRC), Vedanta Resources (LON:VED) and Antofagasta (LON:ANTO) have all shed between 3.5 and 2.9 per cent already this morning.

Randgold Resources (LON:RRS) gained as investors turned to gold as a safe stock with the group positing gains in the region of one per cent.

The insurance sector has also been hit due to falling equity valuations with Prudential (LON:PRU) still headlining the sector with losses of three per cent ahead of the group’s AGM meeting in London today where CEO Tidjane Thiam is set to face calls to stand down after the firm’s failed takeover bid of AIA last week.

The top climber of morning trading so far has been BP (LON:BP) which has gained over three per cent as it announced the recent measures to cap the deep-sea oil spill in the Gulf of Mexico is containing around half of the leaking oil.

At 10:00BST the FTSE 100 index is down 1.14 per cent to 5067.32 shedding 58 points.

 

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