Markets: Global gloom dampens the markets

By SCOTT REID
Published on 25/06/2012 21:29

LONDON’S top share index tumbled to its lowest closing level in nearly two weeks yesterday amid renewed global growth concerns and fading hopes of any near-term radical measures to resolve the eurozone crisis.

European leaders have agreed on a £100 billion package to try to kick-start growth, but the chances of other initiatives at a summit this week have been slashed by German chancellor Angela Merkel, who has resisted pressure for common eurozone bonds.

Chris Beauchamp, market analyst at IG Index, said: “Once again Merkel has done her ‘Nein, nein, nein’ routine, declaring that Germany remains opposed to joint bonds, since this would also mean joint liability for debts.

“This was, is and will remain the fundamental issue in the crisis. In this febrile atmosphere, there is little that seems capable of lifting markets from their gloom.”

The benchmark FTSE 100 index of Britain’s biggest stocks slid 63.04 points, or 1.1 per cent, to end the day at 5,450.65 points – its lowest close in nearly two weeks and its steepest daily fall since 1 June.

Recent gloomy economic data from China hit miners, with big fallers including Rio Tinto, which declined 109.5p to 2,872.5p and Kazakhmys off 28p at 674p.

Among financial stocks, Lloyds Banking Group was down 0.9p at 30.4p while Royal Bank of Scotland was off 6.4p to 236.8p on fears the IT meltdown will land it with tens of millions of pounds in compensation and costs.

There was also a decline of 1 per cent for Morrisons after its respected finance director said he planned to leave the business after nearly eight years in the role. Shares were 3.6p lower at 264.8p.

NEW YORK: Wall Street fell sharply last night, putting the Standard & Poor’s 500 index just a shade above break-even for the month, as investors saw little reason for optimism ahead of a European Union summit later this week.

The Dow Jones industrial average dropped 137.97 points, or 1.09 per cent, to end the day on 12,502.81 while the broader S&P 500 dropped 21.30 points, or 1.60 per cent, to close on 1,313.72. The Nasdaq Composite Index dropped 56.26 points, or 1.95 per cent, to 2,836.16 by the close.