Disheartening words from Europe send FTSE 100 deeper into the red
BRITAIN’S FTSE 100 fell yesterday, extending earlier losses, weighed by worries the European Central Bank may not deliver enough stimulus this week to tackle a global economic slowdown, as comments by German policymakers further dented expectations.
At the close, the FTSE 100 was down 45.97 points, or 0.8 per cent, at 5,647.66, also weighed by weak results from BP. However, the index ended the month up two per cent.
Volume was once again weak at 73 per cent of its 90-day daily average, with many investors keeping to the sidelines ahead of central bank policy announcements.
Germany’s finance ministry reiterated its view yesterday that there is no need to grant a banking license to the European Stability Mechanism, the Eurozone’s new bailout fund. A banking licence would allow the ESM to borrow cash from the ECB and purchase bonds from indebted countries.
The news halted the FTSE’s three-day winning rally triggered by ECB president Mario Draghi’s pledge last week to do whatever it takes to protect the euro, which fuelled expectations the bank will resume buying bonds to ease soaring Spanish and Italian borrowing costs.
Banks were the worst performing sector, halting a four-day winning rally and taking a combined 11 points off the FTSE, as poor results from European peers UBS and BBVA capped momentum in the sector.
Oil company BP was down 4.2 per cent, after it took a $5bn charge in its second quarter results, struggling under the weight of litigation over the 2010 oil spill and a row with its Russian partners.