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Friday 28th of May 2010
May 25, 2010    

Lloyds Banking Group leads declines on 100

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by Elaine Frei
Lloyds Banking Group leads declines on 100

European equities markets were lower Tuesday on continuing concerns that the region’s debt crisis could get worse, as well as on concerns over tensions between South Korea and North Korea after the president of South Korea asked the United Nations to censure North Korea for the sinking of a South Korean naval ship in March.

The FTSE 100 was 2.54 percent lower to 4,940.68 in London, while the FTSE 250 dropped 3.04 percent to 9,189.35 even though the Office of National Statistics said that the UK’s gross domestic product was up 0.3 percent in the first quarter over the fourth quarter of 2009, and despite of 1.2 percent growth in UK manufacturing in the first quarter, its biggest gain in four years.

There were no winners at all on the 100 on the session, while banks took three of the top five spots on the decliners list on the index, led by Lloyds Banking Group (LSE: LLOY) with a drop of 8.92 percent, while Royal Bank of Scotland (LSE: RBS) fell 5.88 percent and Barclays Bank (LSE: BARC) was down 5.67 percent.

Pubs operators led declines on the 250, with Enterprise Inns (LSE: ETI) down 10.7 percent for the worst performance of the session in the travel and leisure sector, followed by Punch Taverns (LSE: PUB), which was 9.89 percent lower.

Soft drinks manufacturer AG Barr (LSE: BAG) was the best performer in London’s session, adding 4.81 percent on the 250.

Miners were lower as metals prices declined, with the biggest decline in the sector coming from iron-ore miner Ferrexpo (LSE: FXPO), which was down 7.44 percent.

In the energy sector, BP (LSE: BP) fell 1.58 percent after announcing an alternate plan in case currently planned efforts to cap its leaking well in the Gulf of Mexico do not work, while the biggest decline in the mostly lower sector came from oil and gas engineering and support services company John Wood Group (LSE: WG), which fell 7.8 percent on the 250.

ARM Holdlings (LSE: ARM), which makes semiconductors used in Apple’s iPhone, was 5.7 percent lower after JPMorgan Chase lowered its recommendation from “neutral” to “underweight”.

JPMorgan Chase also cut its recommendation on German chipmaker Infineon (FWB: IFX), from “overweight” to “neutral, sending it 4.16 percent lower for the worst performance of the session on the Dax.

The FTSE Eurofirst 300 was 2.26 percent lower to 951.24 while the Dax fell 2.34 percent to 5,670.04 as the German finance minister proposed to widen its limit on naked short-selling from some banks and insurers to all German stocks.

At the same time, the CAC-40 was 2.9 percent lower to 3,331.24 and the IBEX dropped 3.05 percent to 9,004.4.

There were no winners on either the CAC-40 or the Dax, while banks were lower regionally.

In Ireland, the Bank of Ireland (ISEQ: BKIR) fell 12 percent and Allied Irish Bank (ISEQ: ALBK) was down 14 percent, while Credit Agricole (Euronext: ACA) fell 6.67 percent and Societe Generale (LSE: GLE) was 6.29 percent lower in Paris, and Spanish bank Banco Santander (BMAD: SAN) dropped 4.5 percent in Madrid.

Markets in the Asia-Pacific region were significantly lower as investors continued to worry about the effect Europe’s debt crisis might have on the global economy, while tensions between South Korea and North Korea escalated on rumors that North Korea’s leader had ordered troops to ready for combat last week, on the same day that South Korea produced evidence that North Korea torpedoed and sank a South Korean warship in March and as North Korea threatened to retaliate if South Korea violated its waters again.

Tokyo’s markets declined on concerns about the situation between North and South Korea, and exporters retreated as the yen strengthened versus the euro, with the Nikkei 225 down 3.06 percent to 9,459.89, while the Topix index fell 2.29 percent to 859.82 and the Mothers market dropped 6.99 percent to 371.64.

Among exporters, Canon (TYO: 7751) was 2.7 percent lower after it said it will halt development of new flat-screen television technology, while printer and semiconductor components manufacturer Kyocera (TYO: 6971) fell 3.2 percent and Tokyo Electron (TYO: 8035) dropped 4.9 percent.

Toray Industries (TYO: 3402), with interests including textiles, was down 8.4 percent after it said it will raise more capital through the sale of shares, but clothing manufacturer Renown, Inc (TYO: 3606) added 26.2 percent on the news that a Chinese textile group will purchase a 41 percent share in the company.

The Shanghai Composite was 1.9 percent lower to 2,622.63 as real estate developers declined again on continuing uncertainties about what the Chinese government might do concerning monetary policy and banks were also lower.

The Straits Times Index fell 2.69 percent to 2,650.61, the Sensex was 2.71 percent lower to 16,022.48, and South Korea’s Kospi dropped 2.75 percent to 1,560.83 on the tensions with North Korea.

In Australia, the Sydney Ordinaries fell 2.87 percent to 4,286.3 and the S&P/ASX200 was 2.96 percent lower to 4,265.3.

Taiwan’s Taiex was down 3.23 percent to 7,086.37, while the Hang Seng fell 3.47 percent to 18,985.5 in Hong Kong.

New York markets were lower in midday trade as the Dow Jones Industrial Average fell 1.78 percent to 9,887.84 at just before 1 p.m., while at the same time the S&P 500 had dropped 1.73 percent to 1,055.08 and the Nasdaq Composite was 1.77 percent lower to 2,174.26.

Crude oil prices were more than $2 per barrel lower in New York trade at midday, while copper and silver prices had fallen but gold prices were up slightly but remained under $1,200 per troy ounce.

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