LONDON (SHARECAST) - The Footsie may have finished 50 points off its intraday low of 5,370, but the blue chip index still recorded a loss of 1.6% as the Euro-crisis showed no signs of abating. Positive economic data from the US provided a little lift in the afternoon, but the steep decline seen from the outset proved too much to recover from.
EQUITIES SOLD OFF AS YIELDS CONTINUE TO RISE
The Spanish Treasury issued €3.56bn in 10-year bonds at a yield of 6.975% compared to 5.433% in the prior 10-year bond auction held on 20 October. The Treasury is facing increased difficulties to finance itself. The bid to cover ratio also fell to 1.54 compared to 1.76 on the previous occasion.
Meanwhile, France raised €6.98bn via auctions of two-year and five-year bonds but it too had to pay a higher price than at last month's auction. The rate on its two-year bonds rose to 1.85% from 1.31% at last month's auction, while the yield on the five-year bonds kicked higher to 2.82% from 2.31% in October.
In the background, France and Germany are reportedly at odds, once again, over how best to tackle the threat of debt contagion in the Eurozone. France is thought to favour the European Central Bank (ECB) intervening in the markets but Germany is said to be resistant to the idea of printing more money and using it to buy back more bonds.
Meanwhile, Citigroup’s chief economist, Willem Buiter, warned on Bloomberg TV that Europe has only weeks, if not days, to avoid a default in Spain or Italy. He is of the opinion that the ECB ought to step into the market.
Retail sales volumes rose very sharply in October, rising by 0.6% on month (0.9% annually), according to the latest data out today from the Office for National Statistics (ONS).
The Nationwide consumer confidence index for the month of October has fallen very sharply, as consumers’ confidence cratered due to fears over the euro crisis.
VEDANTA RESOURES LEADS MINERS LOWER
With metals prices taking a hit on euro fears, the miners were the worst performers of the day. Three-month copper on the London Metal Exchange fell to $7,584 a tonne in the afternoon, down from $7,730 at yesterday’s close, as investors showed concerns that the escalating euro crisis could have an impact on demand. Vedanta Resources dropped 7% by the close, closely followed by Antofagasta, Fresnillo and ENRC.
National Grid was among the high risers after reporting solid first half results which saw underlying profit before tax for the six months ended 30 September rose 2% to £953m from £938m. While this was below some market expectations, investors seemed pleased after the board approved an increase of 8% in the interim dividend.
Commodities trading and mining behemoth Glencore swung between gains and losses throughout the day, but finished in the blue. The group saw production of copper rise 40% and gold (and equivalents) rocket 45% in the three months to the end of September.
On the FTSE 250, Pace and Mothercare were big movers, dropping 23.6% and 16.7%, respectively. Pace confirmed that full-year profits will be well under previous estimates due to the problems arising from a plant closure in Thailand, while Mothercare revealed a first half pre-tax loss of £81.4m, down from a profit of £0.3m the year before.
FTSE 100 - Risers
Admiral Group (ADM) 825.00p +3.06%
National Grid (NG.) 641.50p +2.39%
Rexam (REX) 332.80p +2.37%
Glencore International (GLEN) 412.90p +1.93%
Diageo (DGE) 1,336.00p +1.06%
British Sky Broadcasting Group (BSY) 721.00p +0.70%
Severn Trent (SVT) 1,600.00p +0.69%
Sage Group (SGE) 278.70p +0.54%
Compass Group (CPG) 568.00p +0.44%
Wolseley (WOS) 1,869.00p +0.27%