The FTSE 100 Index was hit by a second late sell-off to fall to its lowest level of the year today amid fears over the latest bank crackdown from President Obama.
Looming restrictions on the risk-taking and size of banks led to a sell-off among financial stocks, despite a bumper £8.3 billion annual profits from Goldman Sachs.
The Footsie followed its 2% fall with a further 1.6% decline today, losing 85.7 points to 5335.1, as traders also fretted over a bigger than expected rise in initial US jobless claims. Wall Street’s Dow Jones Industrial Average fell more than 2% in early trading.
China’s bigger than expected 8.7% growth in GDP last year meanwhile fuelled fears over a slowdown as policymakers shift towards controlling inflation.
Investors were tempted into more defensive shares amid uncertain trading conditions, while a rally for the dollar sent sterling down to 1.61 against the greenback. Against the euro, the pound held at around 1.15 as worries over Greece’s debt position lingered.
United Utilities added 16.5p to 525p – more than 3% – as the company introduced a smaller than feared dividend cut in response to a tough settlement from regulator Ofwat.
Severn Trent was also on the front foot, adding 20p to 1147p, while International Power was 7.7p dearer at 319.7p despite dispelling takeover talk earlier in the week.
British Airways was the leading Footsie riser after low-cost rival easyJet said key performance measures were either better than last year or ahead of expectations. BA shares rose 7.3p to 209.5p, while in the FTSE 250 Index easyJet lifted 18.8p to 383.8p.
Among banking stocks, Barclays fell 17.85p to 283p, as its chairman warned of a “tsunami” of regulatory pressure on the sector. Brokers at Credit Suisse also cut their target price on the stock yesterday.
Royal Bank of Scotland was the Footsie’s leading faller, off 7% or 2.68p at 35.32p, while Lloyds Banking Group fell 3.2p to 53.3p.
Supermarket chain Morrisons was off 3.5p at 295.3p after sales growth over Christmas surpassed rivals but underwhelmed investors. Rival Tesco fell 4.75p to 420.95p, while Sainsbury’s was 1.8p lower at 330p.
Broadcaster BSkyB was virtually unchanged after it lost its challenge at the Court of Appeal over the Government’s decision to force it to reduce its 17.9% stake in ITV. Shares edged 4p lower to 560p after the verdict, with ITV ticking 0.3p up to 58.15p.
The second-tier was dominated by pub firms after Enterprise Inns issued a trading update suggesting some encouraging trends for the industry.
Enterprise shares jumped almost 20% or 18.6p to 113.5p and rival Punch Taverns added 6.6p to 81.05p, a gain of nearly 9%.
The biggest Footsie risers were BA up 7.3p at 209.5p, United Utilities up 16.5p at 525p, International Power up 7.7p at 319.7p and Reed Elsevier up 10p at 520.5p.
The biggest Footsie fallers were RBS down 2.68p at 35.32p, Fresnillo down 48p to 728p, Anglo American off 163p at 2488p and Kazakhmys down 82p at 1280p.