Eurozone debt fears hit FTSE

The London market’s longest losing streak in nine years looked set to continue today after fresh eurozone debt fears eroded confidence.

Eurozone debt fears hit FTSE

The London market’s longest losing streak in nine years looked set to continue today after fresh eurozone debt fears eroded confidence.

The FTSE 100 Index lost earlier gains to slip 31 points to 5109, after Portugal’s credit rating was slashed to junk status and German Chancellor Angela Merkel reiterated her opposition to eurobonds.

London’s blue chip shares index is on course to close in negative territory for its ninth session in a row, which would equal its longest losing streak since January 2003.

With Wall Street closed for the Thanksgiving holiday, traders had been hopeful of some respite after the Dow Jones Industrial Average slumped by 2% on Wednesday night to finish at its lowest point since the start of October.

But Ms Merkel’s opposition to eurobonds, which are designed to help lower borrowing costs for the weaker members of the eurozone, reinforced fears about political divisions within the currency bloc.

It came as Italy’s borrowing costs rose back above the 7% level seen as unsustainable and Fitch downgraded Portugal’s credit rating amid a major strike in the country.

Today’s events added to uncertainty over the eurozone’s future which was heightened yesterday by the failure of a German bond sale, which fuelled fears the crisis has infected even the strongest country in the region.

Today’s falls were despite miners doing their best to lift spirits, with Vedanta Resources up 28.3p to 957.3p and Kazakhmys ahead 16.8p to 805.3p.

There was also a recovery for banking stocks, with Royal Bank of Scotland coming off a two-year low to stand 0.2p higher at 17.6p. Barclays was 3.8p higher at 151.7p, while Lloyds Banking Group lifted 0.6p to 22.4p.

The highest flying stock of the session was British Airways and Iberia owner International Airlines Group. Its shares jumped 5% or 6.45p to 140.25p after analysts at Societe Generale raised their guidance from sell to hold.

Dixons Retail Group was among the leading performers in the FTSE 250 Index after the Currys and PC World business reported smaller-than-expected half-year losses, helped by an improved performance in the UK.

Matthew McEachran, an analyst at Singer Capital Markets, said Dixons’ losses were £5m better than feared, adding that it was clear the company’s transformation plan was helping it to win back market share.

Shares jumped 0.8p to 10.1p while its continental rival Kesa Electricals lifted 5.1p to 85.3p.

However, the gains for the retail pair were more than eclipsed in the second tier by a further recovery for shares in Thomas Cook.

The travel giant slumped 75% on Tuesday but has now improved in its last two sessions, helped by speculation that its banks were keen for a financial restructuring rather than outright ownership of the debt-laden firm.

Shares were 32% or 3.7p higher at 14.8p.

Pubco Enterprise Inns was boosted after the British government announced “substantive” reforms aimed at boosting the country’s pubs but stopped short of banning controversial ’beer ties’ that see publicans forced to buy their drinks from pubcos. Shares rose 11%, or 3.3p at 33.5p.

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