Markets: Europe weighs on financial stocks

ROYAL Bank of Scotland was the biggest faller in London’s top flight on Wednesday as financial stocks were punished for declining confidence in European austerity measures.

Shares in the bank, hit by negative broker comment this week despite promising more job cuts and a return to dividend payments within two years, slid 5.5 per cent or 14.9p to 255.1p.

Sentiment for the sector was further soured by vocal disagreements among eurozone member countries on how to recapitalise struggling banks. Angus Campbell at Capital Spreads said Italy’s public refutation of plans to request financial assistance added to the gloom created by anti-austerity riots in Spain and Greece.

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“This has added to the concern amongst investors that no matter how much stimulus central banks provide, it will not be enough to prevent an escalation of the crisis that has already seen five bailouts,” he said.

In London, the FTSE 100 Index slumped 91.6 points to 5,768.1, with Barclays down 9.6p at 213.7p and Lloyds Banking Group 1.7p lower at 38.9p.

In the insurance sector, More Than parent RSA dropped 5 per cent or 5.6p to 113.1p amid fears over the cost of claims related to the floods across the UK after the most intense September storm for decades. Aviva was also lower, down 7.8p to 321.3p, and Legal & General dropped 3.2p to 132.7p.

Miner Anglo American was another heavy faller, down 69.5p at 1,831p after it said only 20 per cent of employees had returned to work at a South African platinum mine after strikes.

There were only two blue-chip stocks in positive territory, with quality control services group Intertek up 8p to 2,720p and British American Tobacco 2p ahead at 3,205p.

NEW YORK: Wall Street was also hit as protests in Spain and Greece over eurozone austerity measures raised fresh concerns over Europe’s ability to get its debt crisis under control.

The Dow Jones industrial average fell 43.96 points, or 0.33 per cent, to finish the day on 13,413.59 while the broader Standard & Poor’s 500 index dropped 8.26 points, or 0.57 per cent, to close on 1,433.33. The Nasdaq Composite lost 24.03 points, or 0.77 per cent, ending the day at 3,093.70.