Did you hear about this? Probably nothing, but...
UK's FTSE dives at auction, banks and telcos drag
LONDON, May 14 (Reuters) - Britain's FTSE 100 closed down 3.5 percent on Monday, as a deeply discounted programme trade undermined shares at the closing auction, while retreating telecoms and banking stocks did much of the damage.
The benchmark index had been down about 70 points moments before the final auction, but finished 206.3 points lower at 5,690.5, its biggest points drop since March 22.
Volume at 1530 GMT was a moderate 1.4 billion shares, while losers outnumbered gainers by roughly nine to one.
``There was a big, big sell programme at deeply discounted prices right at the close. It's really bashed the market,'' said one dealer.
But traders said the market could bounce 100 points or more at Tuesday's opening, reversing the impact of the programme trading, which involves the block selling or buying of a basket of shares. ``It should reverse itself in the morning,'' said one.
London had already spent the day in negative territory, as investors fretted that the recent mixed bag of U.S. economic data could undermine prospects for another deep cut in U.S. interest rates when the Federal Reserve meets on Tuesday.
``We're in a period of falling interest rates, but aside from that, the fundamental macroeconomic situation is still worsening and you have still got an element of denial with earnings forecasts in the UK,'' said Martin Brooker, European equity strategist of Credit Lyonnais Securities.
Telecoms were a major drag as British Telecommunications (quote from Yahoo! UK & Ireland: BT.L) tumbled 4.9 percent to 500-1/2p, below the 507 pence ``ex-rights'' price to which its recent 5.9 billion pound, three-for-ten rights issue should have diluted the stock.
Vodafone Group (quote from Yahoo! UK & Ireland: VOD.L), which placed shares this month to finance two acquisitions in Spain and Japan, also weighed heavily with a fall of 6.4 percent.
Merger speculation put pressure on several banking stocks, including Barclays (quote from Yahoo! UK & Ireland: BARC.L) and HSBC Holdings (quote from Yahoo! UK & Ireland: HSBA.L), while oil shares also headed lower. |
