BSkyB’s on-off takeover saga and renewed fears over the spread of Europe’s debt crisis led to a dramatic session in the City today.
The FTSE 100 Index finished 61.4 points lower at 5929.2, with some of Britain’s biggest banks more than 3% cheaper on worries that larger countries such as Italy and Spain could follow Greece into the financial mire.
BSkyB was also down by another 5%, but the fall of 34.75p to 715.25p was a modest pull back on earlier in the session when City commentators predicted that News Corporation’s bid for the broadcaster was dead in the water.
Rupert Murdoch’s News Corp stated its intention to fight on by withdrawing an offer to hive off Sky News as a separate company and will instead engage with the Competition Commission.
At 715p, shares are broadly in line with the price that Mr Murdoch’s company originally proposed last June when it revealed its interest in bidding for the outstanding 61% of BSkyB. Panmure analyst Alex DeGroote said earlier in the day that he saw just a 10% chance of NewsCorp success.
Markets worldwide continued to reflect economic worries as the Dow Jones Industrial Average shed another 100 points following Friday’s grim report that employers created the fewest number of jobs in nine months.
The slump in banking shares amid fears over the sector’s exposure to a debt crisis in Spain and Italy saw Barclays slide 9.3p to 233.95p, while Royal Bank of Scotland fell 1.5p to 35.7p and Lloyds Banking Group dropped 1.7p to 44.8p.
Ongoing uncertainty over a Greek debt default added to the pressure on the euro, which fell below the 1.40 US dollars mark for the first time since May.
The pound also made progress against the single currency at 1.13, but slipped by more than 0.5% against the dollar on fears that the UK economy has contracted in the second quarter.
Other high profile fallers included insurer Aviva, which is heavily exposed to continental markets and dropped 16.7p to 419.1p.
One of the biggest rises came from International Power as analysts considered that the Australian government’s proposals on targeting CO2 emissions would have a negligible impact on earnings. Shares were 7.8p higher at 309.1p.
Outside the FTSE 100 Index, shares in Northumbrian Water jumped 5% – up 21.4p to 447.7p – after the company said it had opened its books to Cheung Kong Infrastructure in light of an indicative takeover proposal worth £2.4bn.
There was no such rally for Premier Foods, which fell another 0.8p to 17.9p, after UBS downgraded the Hovis owner in light of a recent profits warning.
Electronics and technology company Laird was the biggest faller in the FTSE 250 Index after America’s Cooper Industries said it was reviewing its takeover interest in the firm. Shares in Laird fell 14p to 190p, a drop of 7%.
The biggest FTSE 100 Index risers were ARM Holdings up 16.5p at 627.5p, International Power ahead 7.8p at 309.1p, Shire up 22p at 2002p and Reckitt Benckiser ahead 28p at 3495p.
The biggest fallers were Essar Energy down 21.6p at 376.3p, BSkyB off 34.5p at 715.5p, Royal Bank of Scotland down 1.5p at 35.7p and Aviva off 16.7p at 419.1p.