Britain’s biggest banks saw shares slide today as fears over the eurozone debt crisis were compounded by a far-reaching debt downgrade of Spanish banks.
Barclays fell 3.6p to 178.3p, Royal Bank of Scotland was off 0.6p at 20.4p and Lloyds Banking Group dropped 1.1p to 26.5p after Moody’s Investor Service cut the credit ratings of 16 Spanish lenders, including the UK arm of Banco Santander.
The wider FTSE 100 Index was 44 points lower at 5294 as political turmoil rumbled on in Greece, where a caretaker government has stepped in to steer the debt-ridden country into repeat elections next month.
Greece, which some fear will have to exit the euro if an anti-austerity party is elected in June, was also hit with a downgrade from ratings agency Fitch.
In the US, a disappointing manufacturing report sparked fears over the country’s economic recovery but all eyes were on Facebook’s pending flotation on the New York Stock Exchange.
Wolseley, which is heavily exposed to the US economy, was one of the biggest fallers after the Federal Reserve Bank of Philadelphia said its index of factory activity slowed for the first time in eight months. Shares were off 68p at 2121p.
While Spain saw its implied borrowing costs pull back slightly, the yield on 10-year bonds still remained above 6%, in a sign that investors lack confidence in the country’s finances.
Moody’s debt downgrade came after the Spanish government was forced to deny there had been a run on the country’s fourth biggest lender, Bankia, amid reports that €1bn had been withdrawn since it was nationalised last week.
The heavily-weighted mining sector was also knocked by the uncertainty surrounding the eurozone as Vedanta Resources slipped 35.2p at 949.9p and Xstrata fell 26.7p at 929.5p.
Outside the top flight, Harvester and All Bar One owner Mitchells & Butlers lost more than 1% of its value after it revealed a sharp slowdown in like-for-like sales.
The group, which saw like-for-like sales growth of just 0.2% in the 11 weeks to April 7, saw shares drop 2.2p to 243.8p.
The London Stock Exchange Group, which runs the LSE and Borsa Italiana, saw its shares surge more than 5% after it revealed a 30% rise in profits to £442m (€551.5m) in the year to the end of March. Shares were 52.5p higher at 1017p.