Markets: British banks suffer for Europe’s sins

LONDON’S FTSE 100 Index capped its worst week for nine months with a fifth straight day of losses as British banking stocks were punished for the sins of their European peers.

The Footsie was 70.8 points lower at 5,267.6, having lost more than 300 points since Monday. It is the lowest close since November, slashing £80 billion from the value of Britain’s top firms in one week. The Dax in Germany and the Cac-40 in France suffered only slight falls.

Michael Hewson at CMC Markets, said: “Somewhat bizarrely, the Moody’s downgrades of Spanish banks on Thursday night saw Italian and Spanish markets spend a lot of the day in positive territory, before sliding back, while the FTSE 100 has been the worst performer.”

Moody’s Investor Service cut the credit ratings of 16 Spanish lenders, including the UK arm of Banco Santander, but the downgrade hit shares in the UK’s two part-nationalised lenders. Hardest hit was Lloyds, down 6 per cent at 26p, while RBS dropped 5 per cent to 20p.

The continuing loss of faith in Europe’s banks and the eurozone project in general gave a boost to gold prices and helped some miners make it onto the risers’ board. Polymetal International was up 22p at 799p and Fresnillo gained 28p at 1,358p.

Outside the top flight, London Stock Exchange Group, which runs the LSE and Borsa Italiana, saw its shares lift 3 per cent after it revealed a 30 per cent rise in profits to £442 million in the year to the end of March. Shares were 27.5p higher at 992p.