The FTSE 100 dropped this afternoon as rising borrowing costs in the euro zone prompted investors to dump equities and other riskier assets. The UK’s blue chip index stood at 5,664, down 50 points (0.9 percent) from Thursday’s close.
Yields on Spain’s benchmark 10 year bonds surged 0.25 to 7.26 percent today, driven by fears that the euro zone’s fourth largest economy could be forced to ask for a full bailout.
Today, the Spanish government approved a €100 billion aid package for its ailing banking sector, which was granted by the EU earlier this year.
“It’s been a bearish end to the week but if the FTSE 100 can retain above the 5,666 level, it would mark a seventh consecutive weekly close higher, which would be the best period of consecutive weekly gains for the FTSE in 7 years,” said chief market strategist at City Index Joshua Raymond.
“There is a danger in this however in sending out a somewhat misleading message that equity sentiment is overriding strong. This is not true.
“What we have seen however is investors buying into the global stimulus story, as recent moves by the ECB, BoE and PBOC has testified.”
Insurance focused buyout group Resolution (LON:RSL, down 8pct at 209.9p) slid to the bottom of the FTSE 100 pile after cancelling plans to return £250 million to shareholders.
Russian steelmaker Evraz (LON:EVR, down 4.2pct at 240p), British Airways owner IAG (LON:IAG, down 2.7pct at 155.7p) and home improvement retailer Kingfisher (LON:KGF, down 2.5pct at 264.9p) also were among the heaviest fallers in the top flight.
Investors also sold asset management companies Schroders (LON:SDR, down 2.7pct at 1,336p) and Aberdeen Asset Management (LON:ADN, down 4.1pct at 248.2p).
Vodafone (LON:VOD, down 2.3pct at 178.8p) also fell after reporting that group turnover fell by 7.7 per cent to £10.8 billion in the three months to June, with mobile service revenues 8.1 per cent lower at £9.98 billion.
Packaging group Rexam (LON:REX, up 1.2pct at 444.8p) and engineering group IMI (LON:IMI, up 1pct at 815.5p) were the only blue chips to tack on one percent of more.