World markets came under pressure today as eurozone debt fears returned to the fore and mounting political tensions between China and Japan troubled investors.
Wall Street’s Dow Jones Industrial Average was broadly flat after anti-Japan protests in China, related to a dispute over islands in the East China Sea, led more Japanese-owned companies to suspend manufacturing operations.
The FTSE 100 Index was 29 points lower at 5863 as traders were concerned by Spain’s reluctance to request help from European rescue funds, which is a necessary condition of a bond-buying programme outlined earlier this month by the European Central Bank.
Spanish 10-year bond yields have remained close to the 6% mark in recent days, while the fading of euphoria over stimulus measures from the US Federal Reserve meant London’s leading shares index fell back further from Friday’s six-month high.
Those on the way down included Barclays after a decline of 3.4p to 224p, while Royal Bank of Scotland’s recent improvement continued to fade as the stock fell for a second successive session, off 9.1p to 265.3p. The other state-backed lender, Lloyds Banking Group, was down 2%, or 1.1p to 38.9p.
Insurer Aviva was the biggest FTSE 100 faller, down 15.7p to 343.6p, after Bank of America Merrill Lynch said the shares looked to have run their course following a decent performance since July. Rival Prudential was also lower, down 21.5p to 819.5p.
In corporate news, Debenhams stole the limelight after surprising London market analysts with a 3.7% rise in underlying sales for the 10 weeks to September 1.
The department store chain has benefited from a 40% jump in online sales, although with most analysts preferring to leave their profit forecasts unchanged until nearer Christmas the shares were flat at 99.3p.
JD Sports Fashion was 19p lower at 712.5p after it reported a big fall in half-year profits due to the impact of its acquisition of struggling Blacks Leisure, which racked up operating losses of £10m.