London banks drop after downgrades for Barclays, RBS and Lloyds Banking Group

| June 22, 2011 | 0 Comments
London banks drop after downgrades for Barclays, RBS and Lloyds Banking Group

European equities markets were lower Wednesday even after the Greek parliament voted 155 to 143 in favor of Prime Minister George Papandreou, clearing the way for passage of budget cuts required by European governments and the International Monetary Fund, along with sales of assets and imposition of a “crisis levy” on wages, in order for Greece to receive further bailout funds.

The FTSE 100 was down 0.04 percent to 5,772.99 in London, while the FTSE 250 dropped 0.16 percent to 11,636.2, with the banking sector down after HSBC Holdings downgraded Barclays Bank, Royal Bank of Scotland Group and Lloyds Banking Group from “overweight” to “neutral”.

The energy sector, insurers, the telecommunications sector and the financial services sector were also mostly lower, although investment managers Man Group (LSE: EMG) was the biggest gainer in the sector and on the 100 after Credit Suisse upgraded it from “neutral” to “outperform”, Goldman Sachs initiated coverage with a “buy” recommendation, and JPMorgan Chase was reported in the media to possibly be getting ready to make a bid for Man.

Home builders, miners, the chemicals, travel and leisure and real estate sectors, retailers and utilities were all mixed.

The worst performers in the travel and leisure sector came from online gamblers as Bwin.party Digital Entertainment (LSE: BPTY) dropped 3.79 percent and Betfair (LSE: BET) was down 3.31 percent, while the biggest gainer in the sector was TUI Travel (LSE: TT), with a gain of 1.63 percent.

Dixons Retail (LSE: DXNS) was the best performer in its sector and on the 250 on reports that Best Buy (NYSE: BBY) could be interested in acquiring the consumer electronics retailer.

The two worst performers on the 100 came from the utilities sector as United Utilities Group (LSE: UU) was down 3.44 percent and Severn Trent (LSE: SVT) dropped 3.12 percent, while over on the 250 Imagination Technologies Group (LSE: IMG) dropped 4.27 percent for the worst performance on the 250.

The FTSE Eurofirst 300 was down 0.42 percent to 1,092.29 while the IBEX fell 0.06 percent to 10,226.2, the Dax was 0.1 percent lower to 7,278.19 and the CAC-40 dropped 0.15 percent to 3,871.37.

Markets in the Asia-Pacific region were mostly higher Wednesday after the confidence vote in Greece, although India’s Sensex was down 0.06 percent to 17,550.6 on a forecast of a below-normal monsoon season, and the Straits Times Index dropped 0.35 percent to 3,042.83.

The Nikkei 225 was up 1.79 percent to 9,629.43 in Tokyo, while the Topix index added 1.63 percent to 828.99 and the Mothers market gained 0.79 percent to 452.81 as companies that do business with Europe were up after the confidence vote reduced concerns over a default by Greece, including a 3.7 percent advance for consumer electronics manufacturer Sony (TYO: 6758), which makes 20 percent of its sales in Europe.

Banks were higher, while carmaker Toyota (TYO: 7203) added 1.1 percent on a higher profits estimate from Deutsche Bank and Jtekt Corp (TYO: 6473), which makes parts for Toyota, was up 3.2 percent after it said in a report delayed by the March earthquake and tsunami that profits will be up 20 percent in the fiscal year ending March 2012.

Hong Kong’s Hang Seng was up 0.04 percent to 21,860, the Shanghai Composite added 0.11 percent to 2,649.32, Taiwan’s Taiex was 0.27 percent higher to 8,621.04, Australia’s markets saw gains as the S&P/ASX200 added 0.54 percent to 4,532.6 and the Sydney Ordinaries gained 0.56 percent to 4,590.8, and the Kospi was 0.77 percent higher to 2,063.9 in South Korea.

New York equities markets were higher in midday trade, but only slightly, with the Dow Jones Industrial Average up just 0.08 percent to 12,199.3 while the S&P 500 had added 0.14 percent to 1,297.35 and the Nasdaq Composite was 0.1 percent higher to 2,690.03.

Crude oil prices were higher after the US Energy Information Administration reported that US crude stockpiles were down by 1.7 million barrels last week, although the decline was slightly smaller than expected, with August contracts for West Texas Intermediate crude up 57 cents to $94.74 per barrel at shortly before 1 p.m. on the New York Mercantile Exchange and Brent crude was last reported up $2.39 to $113.34 per barrel on the ICE Futures Europe exchange in London.

Gold and silver prices were higher in New York trade, but copper was down 1.5 cents per pound in New York and had dropped $60 per tonne on the London Metal Exchange as the US Federal Reserve did as expected and reiterated its commitment to holding interest rates at low levels for the foreseeable future.

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