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Sunday 06th of June 2010
June 4, 2010    

Royal Bank of Scotland leads declines on FTSE 100

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by Elaine Frei
Royal Bank of Scotland leads declines on 100

European equities markets were lower Friday after a statement from Hungary, through its prime minister’s spokesman, said that its economy is in trouble, bringing focus back to Europe’s debt problems after the spokesman accused the nation’s previous administration of manipulating data and lying about the economy and said that a default is not out of the question.

Markets in Europe were also hurt by new data from the US Labor Department showing that fewer than expected new government jobs were created last month and that most of them were temporary hires for work on the 2010 census, while private-sector job creation also did not reach anticipated levels.

The FTSE 100 was down 1.63 percent to 5,126 in London, while the FTSE 250 dropped 2.05 percent to 9,599.85.

Banks led decliners on the 100 on the new worries about debt, with Royal Bank of Scotland (LSE: RBS) turning the worst performance in the sector and on the index with a decline of 5.46 percent, followed by Barclays Bank (LSE: BARC), which was 4.66 percent lower on the session.

The energy sector was mostly lower, with declines led by John Wood Group (LSE: WG), which dropped 4.38 percent, but engineering companies related to the energy industry led gains on both the 100 and 250 as AMEC (LSE: AMEC) added 1.06 percent on the 100 and Lamprell (LSE: LAM) was up 4.32 percent on the 250, followed there by oil and gas explorer Salamander Energy (LSE: SMDR), which was 3.57 percent higher.

The only gainer in the mining sector was Gem Diamonds (LSE: GEMD), which added 1.56 percent, while Aquarius Platinum (LSE: AQP) fell 5.61 percent for the worst performance in the sector, Vedanta Resources (LSE: VED) was 5.23 percent lower and Kazakhmys (LSE: KAZ) dropped 5.01 percent.

Directories publisher Yell Group (LSE: YELL) was the worst performer on the 250 and in the media sector as it fell 8.92 percent, while the only gainer in the sector was online price comparison provider Moneysupermarket.com (LSE: MONY), with a gain of 2.52 percent.

The real estate sector was lower, led by residential property group Grainger (LSE: GRI), which fell 8.08 percent while SEGRO (LSE: SGRO) was down 4.67 percent.

The FTSE Eurofirst 300 was down 1.96 percent to 997.59 while the Dax fell 1.91 percent to 5,938.88, the CAC-40 was 2.86 percent lower to 3,455.61 and the IBEX dropped 3.8 percent to 8,923.4.

There were only two gainers each on the CAC-40 and the Dax, where banks also did poorly.

The Paris index was led down by Societe Generale (Euronext: GLE) on unconfirmed reports that it had suffered losses on derivatives, falling 7.58 percent on the rumors while BNP Paribas (Euronext: BNP) was 5.97 percent lower and Credit Agricole (Euronext: ACA) dropped 5.11 percent, while over on the Dax Deutsche Bank (FWB: DBK) was down 2.88 percent.

Markets were mixed in the Asia-Pacific region.

The Nikkei 225 was down 0.13 percent to 9.901.19 in Tokyo, while the Topix index fell 0.05 percent to 890.16 but the Mothers market added 0.74 percent to 424.86 after former finance minister Naoto Kan was elected Prime Minister by the lower house of Japan’s parliament.

Analysts said that Kan, who as finance minister advocated a weak yen to aid exporters, said that Kan will likely ease investor anxiety by putting in place a more disciplined fiscal policy.

In comments after his election, Kan said he would focus on upping demand for products and creating more jobs as a way of beating deflation.

Fuji Heavy Industries (TYO: 7270), which makes Subaru automobiles, added 7 percent on the session on media speculation that its North American operating profit could go up by as much as 40 percent in the fiscal year ending in March 2011.

Among markets seeing declines, Hong Kong’s Hang Seng fell 0.03 percent to 19,780.07 and Taiwan’s Taiex was down 0.21 percent to 7,344.54, while in Australia the Sydney Ordinaries dropped 0.75 percent to 4,472.4 and the S&P/ASX200 was 0.82 percent lower to 4,449.4.

Other markets were higher, including the Shanghai Composite, which added 0.04 percent to 2,553.59 while the Kospi was up 0.14 percent to 1,664.13 in South Korea, the Straits Times Index was 0.47 percent higher to 2,806.51 in Singapore, and India’s Sensex gained 0.56 percent to 17,117.69.

New York markets were lower on the new worries about Europe’s economic woes and on the new jobs data from the Labor Department, despite the fact that the US unemployment rate fell from 9.9 percent in April to 9.7 percent in May.

In midday trade on Wall Street, the Dow Jones Industrial Average was down 2.21 percent to 10,028.26 while at the same time the S&P 500 had dropped 2.15 percent to 1,079.09 and the Nasdaq Composite was 2.13 percent lower to 2,253.94.

Crude oil prices were down by at least $2.50 per barrel in midday trade, to below $73 per barrel, while copper and silver prices were both lower but gold gained as investors looked for safe investments as the euro weakened and equities markets declined.

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