FTSE falls as Congress stand-off continues

Thu, 28th Jul 2011

The FTSE 100 index wobbled on Wednesday as investors feared the US would fail to reach an agreement ahead of next week's crucial date. The blue chips fell by 1.2 per cent, wiping off recent gains to close at 5856, a fall of over 73 points.

The financial sector was one of the industries being hardest hit by the unsettled outlook due to their increased exposure to the debts. Half of the top 10 biggest fallers in the index were either bankers or insurance firms. The sector was also hit with an overall downgrade with the debt problems being cited as the main reason for the downgrade.Lloyds Banking Group was the second bottom firm of the day – the only company to perform worse was Scottish and Southern Energy – with a drop of 4.28 per cent. Barclays was third in the list with a slide of 3.39 per cent while Royal Bank of Scotland took fourth place by shedding 3.21 per cent.The banks were also affected by the disappointing results from Spanish firm Santander who reported profits which were lower by 21 per cent.Risk sensitive mining firms fell overall but the precious metal firms continued to buck the trend and perform well. With the price of gold and silver rising yet again, both Fresnillo and Randgold Resources were higher with climbs of 0.62 per cent and 0.47 per cent respectively.Another miner was also moving upwards as it broke ranks and climbed by 1.3 per cent. Lonmin was boosted as Credit Suisse moved the firm's rating higher, based on valuations.
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