The FTSE 100 Index lost ground today as renewed worries over the impact of the Dubai debt crisis kept anxious investors on the sidelines.
London’s drop came after Dubai’s main stock exchange slid more than 7% and Abu Dhabi markets fell more than 8% on the first day of trading since news that Dubai World, the emirate’s investment and development engine, would seek a six-month delay in paying creditors on nearly $60bn (€40bn) in debt.
The Footsie, which steadied on Friday after slumping 3% on Thursday, stood 51.6 points lower at 5194.1 by mid-morning.
The blow to confidence caused by the situation in Dubai was seen in the banking sector after heavy falls for Royal Bank of Scotland and Lloyds Banking Group. The latter, which is currently attempting to raise £13.5bn (€14.7bn) from shareholders, also suffered after Deutsche Bank cut its price target to 70p from 115p and said fears remained over a double dip in the economy.
Lloyds shares were 3.9p lower at 54.7p, while RBS dropped 1.75p to 33p.
Other fallers included London Stock Exchange, which is 22% owned by Borse Dubai. Shares dropped 10.5p to 765.5p.
Heavyweight stocks dragging the Footsie lower included pharmaceuticals firm GlaxoSmithKline, which dropped 19.5p to 1259.5p. Royal Dutch Shell eased 29.5p to 1801.5p after oil prices remained near $76 a barrel.
On a brighter note, the biggest rise in the top flight came from TUI Travel after rival Thomas Cook posted full-year figures slightly ahead of expectations and said the outlook for next year remained positive.
Thomas Cook rose 1p to 217.2p, while Thomson Holidays owner TUI rose 4.6p to 248.3p ahead of its own figures tomorrow.
Pub firms Enterprise Inns and Punch Taverns struggled in the FTSE 250 Index, falling 5.65p to 98.45p and 3.7p to 75.2p respectively.