Investors deserted the markets today after a jump in Italy’s borrowing costs pushed the country into “bailout territory”.
The FTSE 100 Index was down 106.9 points at 5,460.4 as Italian 10-year bonds soared past the 7% mark to the same unsustainable levels that caused Ireland and Portugal to seek multi-billion pound bailouts from the EU and IMF.
Miners lost initial gains in London while banking stocks took a fresh battering.
The mood in the sector, which is exposed to £10.9billion of Italian debt, was not helped by HSBC’s disclosure of a 23% drop in third quarter earnings at its investment banking division.
HSBC shares were 6% or 31.2p lower at 506.3p, while Lloyds Banking Group fell 1.4p to 27.5p after Moody’s warned that the bank’s credit rating was under review because of chief executive Antonio Horta-Osorio’s absence on sick leave.
Admiral shares slumped by 305.5p to 887.5p after the car insurer said higher-than-normal levels of personal injury claims were likely to dent its profits growth, while in the FTSE 250 Index, Kesa Electricals lost initial gains seen after it announced a deal to rid itself of loss-making UK chain Comet. Shares were 2.8p lower at 99p.
The biggest Footsie risers were Randgold Resources up 175p at £75.55, Smith & Nephew ahead 6.5p at 550p, International Power up 3p at 336.7p and Severn Trent ahead 13p at £15.78.
The biggest Footsie fallers included Essar Energy off 22p at 284p and Royal Bank of Scotland off 1.2p at 21.1p.
Stuart Lamont, of investment manager and financial planning specialist Brewin Dolphin in Aberdeen, noted that the risers were led by First Group which added 4.03% to 340.85p, Faroe Petroleum up 3.89% to 154p and A.G. Barr which rose 0.87% to 1,269.5p.
The day’s fallers included Aberdeen Asset Management down 3.05% to 187.7p and Cairn Energy which shed 2.77% to 281p.