Eurozone fears drag down world markets

Tuesday 18 September 2012

World markets continued their retreat from recent highs today as persistent fears over the eurozone weighed on investor minds.

The FTSE 100 Index closed 25.4 points lower at 5868.2, dragged further away from Friday's six month high amid concerns over Spain's reluctance to request help from European rescue funds - a necessary condition of a bond-buying programme outlined earlier this month by the European Central Bank.

Wall Street's Dow Jones Industrial Average was broadly flat at the time of the London close, while the Cac-40 in France and Germany's Dax both closed 0.8% lower.Spanish 10-year bond yields have remained close to the 6% mark in recent days, while the fading euphoria over stimulus measures from the US Federal Reserve has added to pressure on stocks.Asian markets were also impacted overnight by anti-Japan protests in China, related to a dispute over islands in the East China Sea, which led more Japanese-owned companies to suspend manufacturing operations.The pound rose against the euro - to just under 1.25 euros - as the Spanish worries encouraged investors to take recent profits seen on the single currency.While there was little reaction to news that UK inflation fell as expected to 2.5% last month, sterling remained strong against a weakened dollar, at nearly 1.63 dollars.Among stocks, Royal Bank of Scotland's recent improvement continued to fade as the group fell for a second successive session, off 7.3p to 267.1p. The other state-backed lender, Lloyds Banking Group, was down 2%, or 1p to 38.9p.Insurer Aviva was the biggest FTSE 100 faller, down 14.3p to 344.9p, 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 19.5p to 821.5p.In corporate news, Debenhams stole the limelight after surprising City 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 99.5p.JD Sports Fashion was 13p lower at 718.5p 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 £10 million.Bury-based JD expects Blacks to break even in the second half, while its core sports brands have continued to post robust trading.Housebuilder and construction firm Galliford Try, which helped build some of the Olympic Park, cheered shareholders as it kept a promise made three years ago to deliver full-year profits of more than £60 million.With the help of its increased exposure to the more robust southern property market, Galliford recorded a figure of £63.1 million, up 80% on a year ago. Shares jumped 18p to 690p.The biggest Footsie risers were British American Tobacco up 89p to 3243p, United Utilities ahead 19p to 707.5p, Diageo up 34.5p to 1718p and Imperial Tobacco up 44p to 2362p.The biggest Footsie fallers were Aviva down 14.3p to 344.9p, GKN off 8.6p to 228.3p, Icap down 12.2p to 338.1p and IMI down 30.5p to 931.5p.

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Eurozone fears drag down world markets

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