FTSE under pressure

The London market remained under pressure today as financial stocks and mining firms led the top flight lower.

The FTSE 100 Index – which fell 1.8% on Monday – was down a further 26.7 points at 4793 by mid-morning amid fears over the US financial system which triggered falls on Wall Street and in Asian markets.

There are also worries that the recent surge in shares has gone too far as September lives up to its billing as a shaky month for stock markets.

Although oil giant BP limited the damage with news of a major discovery, investors were showing little appetite for risk due to uncertainty about whether the rally can be sustained.

Financial shares were among those to feel the heat, with Royal Bank of Scotland down 2.1p at 53.4p and Lloyds Banking Group off 5.4p to 101.7p amid reports it had won backing from its investors to raise £10bn (€11.3bn) to reduce its dependence on the UK taxpayer.

Insurance firms were also under pressure on further speculation that the sector may have to raise £50bn (€57bn) to meet capital requirements under new solvency rules. Legal & General was the top FTSE faller, losing 4.3p to 70.2p.

BP however was the leading riser after news of a major discovery in the Gulf of Mexico sent shares in the heavyweight up 13.4p to 532.9p.

It was followed higher by a host of defensive shares as investors sought safer havens, with Imperial Tobacco up 24p to 1747p. Supermarket Morrisons was also a leading climber, up 6.8p to 282.8p after Deutsche Bank lifted its target price.

In the second tier Currys’ owner DSG International reported another sharp fall in UK sales but said stronger a international performance helped limit the overall decline to 6%.

With chief executive John Browett talking of an “encouraging” start to the year, shares rallied strongly early on but later stood flat at 27p.