Banks lower in London; Barclays drops 11.47 percent

| August 18, 2011 | 0 Comments
Banks lower in London; Barclays drops 11.47 percent

European equities markets were significantly lower Thursday on dissent within the US Federal Reserve over monetary policy among officials, while markets were also hurt by new numbers from the US Labor Department showing that first-time unemployment claims were up by 9,000 to 408.000 last week, more of an increase than had been forecast.

Two officials of the US Federal Reserve criticized Fed Chairman Ben Bernanke’s promise last week to hold interest rates at near zero, with the President of the Dallas Fed saying that it isn’t the Fed’s place to protect investors, while the Philadelphia Fed’s president called Bernanke’s interest rate policy “inappropriate”.

The FTSE 100 was down 4.49 percent to 5,092.23 with no gainers in London, while the FTSE 250 dropped 4.91 percent to 9,860.22 as it was down more than 500 points as banks were lower and UK retail sales added less than expected in July as they gained just 0.2 percent when fuel purchases were included in the equation.

Banks dropped on reports that regulators in the United States are watching large European lenders more closely amid fears that funding will tighten due to the debt crisis in Europe, with Barclays Bank (LSE: BARC) leading declines in the sector and on the 100 as it dropped 11.47 percent, followed by Royal Bank of Scotland Group (LSE: RBS) with a decline of 11.31 percent while Lloyds Banking Group (LSE: LLOY) was 9.26 percent lower and even the best performer in the sector, Standard Chartered (LSE: STAN), was down 5.2 percent.

Travel agent Thomas Cook Group (LSE: TCG) led declines in the travel and leisure sector and on the 250 as it dropped 16.13 percent as 10 sector constituents were down by 5 percent or more and only vehicle rental agent Avis Europe (LSE: AVE) saw gains as it added just 0.16 percent.

Hedge fund BH Global (LSE: BHGG) was the best just a few gainers on the 250 as its USD shares added 0.63 percent, while the real estate sector was lower except for real estate service provider Savills (LSE: SVS), which was up 0.51 percent.

Miners were lower on concerns that demand will decline worldwide, with coal miners New World Resources (LSE: NWR) A shares down 13.09 percent as 16 sector constituents dropped 5 percent or more and 4 were down by 10 percent or more, including a 12.17 percent decline for Kenmare Resources (LSE: KMR) while iron ore miner Ferrexpo (LSE: FXPO) was down 11.42 percent and Xstrata (LSE: XTA) dropped 10.17 percent.

The FTSE Eurofirst 300 was down 4.94 percent to 923.85 while the IBEX fell 4.7 percent to 8,317.7 and saw just one gainer, the CAC-40 was 5.48 percent lower to 3,076.04 with no gainers and the Dax also had no gainers as it dropped 5.82 percent to 5,602.8.

Markets in Asia and the Pacific region were lower on the dissent within the US Federal Reserve regarding monetary policy as outlined by Fed president Ben Bernanke.

Japan’s markets were lower as the yen was near its strongest since World War II, trading at 76.45 yen to the US dollar during the session, with the Nikkei 225 down 1.25 percent to 8,943.76 while the Topix index was 1.2 percent lower to 767.31 and the Mothers market dropped 0.57 percent to 456.43, with declines also coming as Morgan Stanley MUFG Securities cut its forecast on Japan’s economic growth in 2012 from 2.9 percent to 1.3 percent.

Carmakers were lower, with Toyota Motor (TYO: 7203) down 1.7 percent and Honda Motor (TYO: 7267) 2.6 percent lower, but Fast Retailing (TYO: 9983) added 3.3 percent after Goldman Sachs raised its recommendation on the clothing retailer from “neutral” to “buy”, citing more consumer spending for clothing in China and a bigger market share in several Asian nations.

The Straits Times Index was down 0.13 percent to 2,824.96 in Singapore, Australian markets were down as the Sydney Ordinaries fell 1.2 percent to 4,319.4 and the S&P/ASX200 was 1.22 percent lower to 4,251.2, the Hang Seng dropped 1.34 percent to 20,016.3 in Hong Kong, the Shanghai Composite was down 1.61 percent to 2,559.47, Taiwan’s Taiex fell 1.64 percent to 7,614.97, the Kospi was 1.7 percent lower to 1,860.58 in South Korea, and India’s Sensex dropped 2.2 percent to 16,469.8.

New York equities markets were also down substantially, with the Dow Jones Industrial Average down 3.63 percent to 10,996.5 in midday trade, while at the same time the S&P 500 had dropped 4.13 percent to 1,144.62 and the Nasdaq Composite was 4.3 percent lower to 2,403.37.

Crude oil prices were lower at midday in New York on demand concerns, with West Texas Intermediate crude down $4.53 to $83.05 per barrel while at last report Brent crude had dropped $3.40 to $107.20 per barrel on the ICE Futures Europe exchange in London.

Gold was up $27.40 to $1,821.20 per troy ounce in midday trade in New York, well in record territory on fears of an economic slowdown, after being as high as $1,829.70 per troy ounce earlier in the session, while silver had added 23 cents to $40.61 per troy ounce, but copper was down in New York and London on demand concerns, with New York prices down 7 cents to $3.98 per pound while prices on the London Metal Exchange were $196 lower to $8,774 per tonne at the close for three-month contracts after going as low as $8,750 per tonne earlier in the session there.

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