View the article online at http://citywire.co.uk/money/article/a875881
FTSE falls as bank shares slump and oil snaps rally
FTSE falls into the red, led lower by banks amid financials sell-off and a fresh slump in oil price.
Update: The FTSE 100 has fallen into the red in the afternoon's trading, led lower by a slump in banking shares and a fresh slump in the oil price, which snapped the sharp rally that began on Friday.
The UK blue-chip index fell 40 points, or 0.7%, to 5,862 with Lloyds (LLOY) among the biggest fallers, down 5% at 63.5p after analysts at JPMorgan cut their target price on the stock.
Banks were also caught up in a broader sell-off of financials across global stock markets. Royal Bank of Scotland (RBS) fell 4.4% to 250.8p, Barclays (BARC) dropped 4.3% to 182.7p, Standard Chartered (STAN) dipped 2.6% to 475.8p and HSBC (HSBA) was down 1.6% at 471.8p.
Adding to the bad news for banks were fears of a regulatory clampdown over IT failures and the prospect of more compensation for victims of interest rate 'swaps' mis-selling.
Treasury Select Committee chairman Andrew Tyrie has written to City regulators the Financial Conduct Authority and Prudential Regulation Authority over the banks' IT failures, according to the Financial Times.
'Every few months we have yet another IT failure at a major bank,' said Tyrie in a letter to PRA head Andrew Bailey. 'Someone - probably the head of the PRA - needs to assume a leadership role, bring together those most involved among regulators and government agencies, and ensure that there are improvements at the banks.'
The news comes as a landmark case against banks' mis-selling of interest rate swaps to small businesses reaches the courts. Holmcroft, an Isle of Man property company, has brought a judicial review of Barclays' compensation scheme that begins today, according to the Telegraph.
The FTSE 100 was also hit by a fresh fall in the oil price, which gave up some gains from Friday's 10% rally as record high production in Iraq threatened to exacerbate fears of oversupply.
Oil rallied to a high of $32.78 by the early hours of the morning, on the expected boost to demand from the cold snap in the US and after investors shorting oil rushed to close their positions.
But news that Iraq was producing up to 4.1 million barrels of oil a day, a record high, sent the price down 3.1% on the day to $31.17.
News sponsored by:
Here at BlackRock, we help investors make more out of commodities with a range of innovative, flexible and resilient investment strategies.
From Brazil and Mexico, to Vietnam and Nigeria, the rapidly developing economies of Latin American and frontier markets, which are some of the smaller, less developed economies in the world, provides investors with a wealth of potential opportunities. Discover why BlackRock's investment trust range is well placed to help you make more of these exciting regions.
In this guide to investment trusts, produced in association with Aberdeen Asset Management, we spoke to many of the leading experts in the field to find out more.
More about this:
Look up the shares
- Lloyds Banking Group PLC (LLOY.L)
- Barclays PLC (BARC.L)
- Royal Bank of Scotland Group PLC (RBS.L)
- BP PLC (BP.L)
- Royal Dutch Shell PLC (RDSb.L)
- BG Group PLC (BG.L)
- Standard Chartered PLC (STAN.L)
- HSBC Holdings PLC (HSBA.L)
What others are saying
Tools from Citywire Money
From the Forums
Weekly email from The Lolly
Get simple, easy ways to make more from your money. Just enter your email address below
An error occured while subscribing your email. Please try again later.
Thank you for registering for your weekly newsletter from The Lolly.
Keep an eye out for us in your inbox, and please add firstname.lastname@example.org to your safe senders list so we don't get junked.