Rate-rigging scandal sees Barclays shares plunge

More than £3bn (€3.75bn) was wiped off Barclays’ market value today as its rate-rigging scandal sent shockwaves throughout the banking sector.

The bank plunged 15.5% into the red, with rival stocks also suffering hefty falls amid fears over the potential for widespread multi-billion pound fines and damages.

London’s wider FTSE 100 Index was 30.9 points lower at 5493.1, while the Dow Jones Industrial Average on Wall Street dropped more than 1% in early trade and indices across Europe also fell.

Sentiment was hit by low expectations over the outcome of this week’s EU summit in Brussels.

Eve-of-summit talks between France and Germany failed to bridge the gulf between austerity and growth, while Angela Merkel continued to resist the “mutualisation” of eurozone debt, which would pool the debt burden.

Spain’s implied borrowing costs pushed back towards the 7% bail-out zone amid fears that the summit will fail to tackle the crisis.

The pound lost ground after gross domestic product figures showed the economic contraction in the fourth quarter of last year was deeper than estimated.

Sterling fell to 1.55 US dollars and 1.25 euros.

But it was bank stocks that were in sharp focus as the fall-out from the Barclays scandal continued with worries other lenders will be engulfed in the scandal.

Barclays shares tumbled 30.5p to 165.6p, while Royal Bank of Scotland was down 26.7p to 206.4p and Lloyds was off 1.2p at 29.9p.

Cillit Bang maker Reckitt Benckiser was among the other big fallers, off 77p at 3300p, after Credit Suisse downgraded the stock amid concerns about its prospects in developed markets such as Europe.

Water utility stocks were higher thanks to news of a £1.2 million sale of three businesses owned by France’s Veolia.

United Utilities rose 15.5p to 674.5p – despite turning ex-dividend – and Severn Trent lifted 22p to 1645p.

In the FTSE 250, department store Debenhams was 2% or 1.7p lower at 85p in spite of reporting a sharp improvement in like-for-like sales for the last quarter.

The gain was driven by promotional activity around key events such as Easter and the Diamond Jubilee and meant margins were lower than a year ago.

But Ladbrokes was the FTSE 250 Index’s biggest faller, down 12% or 21.1p to 152.7p, after it warned digital profits for the first half of 2012 would be 50% lower after punters failed to back England during Euro 2012 and its new website was delayed.

Pub company Greene King was slightly higher, up 4.5p to 536p, after it reported an 8.6% rise in underlying profits to £152m, driven by 17% growth in food sales.

The biggest Footsie risers were United Utilities up 15.5p to 674.5p, Aggreko ahead 39p at £2, CRH up 16p to 1148p and Severn Trent up 22p to 1645p.

The biggest Footsie fallers were Barclays down 30.5p to 165.6p, Royal Bank of Scotland off 26.7p to 206.4p, Icap down 14.6p to 330.9p and Lloyds Banking Group down 1.2p to 29.9p.