Eurozone worries weigh heavy on Footsie

Wednesday 19 September 2012

World markets continued their retreat from recent highs yesterday as persistent fears over the eurozone weighed on investors' minds.

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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 as London closed, 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 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 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 Footsie 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 Blacks Leisure, which racked up operating losses of £10 million.Housebuilder and construction firm Galliford Try cheered shareholders as it kept a promise made three years ago to deliver full-year profits of more than £60 million.

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Eurozone worries weigh heavy on Footsie

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