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FTSE sell off as investors rush to take profits

Nervousness in Europe starts a stock market correction on both sides of the Atlantic.

 
FTSE sell off as investors rush to take profits

(Update) Stock markets have pulled back, with the FTSE 100 dropping 100 points or 1.6% to 6,245, as investors on both sides of the Atlantic take profits after the surge in equities to a five-year high.

On Wall Street the Dow Jones industrial average sank 109 points to 13,900 as investors followed European markets south.

A combination of a poor eurozone consumer confidence survey, electoral uncertainty in Italy and the corruption scandal engulfing Spain's prime minister Mariano Rajoy conspired to push the FTSE Eurofirst 100 index down 1.35% or 10 points to 1,151.

Italy's FTSE MIB index plunged 520 points or 3.6% to 16,700 as investors rushed to cash in on the New Year rally, prompted by polls showing a revival in the ratings of former prime minister Silvio Berlusconi.

Meanwhile, Spain's Ibex 35 fell 247 points, or 3%, to 7,981; the Germany Dax slid 132 points, or 1.7%, to 7,700 and France's Cac 40 sank 96 points or 2.6% to 3,677.

The euro tumbled 0.7% against the dollar to $1.3549 although traders expect it to bounce back as the European Central Bank's monetary policy is tighter than the ultra-loose stance of the US Federal Reserve.

Bank shares tumbled in the market slide and after chancellor George Osborne launched the Banking Reform Bill, which will ring fence banks' high street operations and increase depositor protection. RBS (RBS.L), which reportedly faces a £500 million fine this week for Libor rate fixing, slid 3% or 10.4p to 330p.

Barclays (BARC.L) dropped 7.6p or 2.5% to 292p ff at 299.5p. Earlier the bank announced the departure of finance director Chris Lucas and general counsel Mark Harding.

But it was Aviva (AV.L), the high yielding insurer, that led the market lower, down 4.5% or 16p to 351.7p.

Randgold Resources (RRS.L) was the biggest of only five FTSE 100 risers approaching close. The index's only pure gold stock jumped 3.3% or 205p to £62.90 after its flagship mine in Mali, where French forces are helping the government fight an Islamic insurgency, broke production targets last year. 

FTSE edges off high after Vodafone downgrade

09.52: Vodafone (VOD.L), a longstanding member of Citywire Top Stocks and a key holding in many investment funds, fell 3.1p or 1.8% to 170p after Citi downgraded the telecoms group to ‘neutral’ from ‘buy’.

The shares have advanced 10% so this year, with talks of a settlement with India over a long-running tax dispute augmenting the general market rally.

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4 comments so far. Why not have your say?

joe stalin

Feb 04, 2013 at 16:28

lol look at te picture! anyone would think it 1987 all over again! Yes so the shorts wanted to force a correction sure pick on the eurozone periphery and have ago at their bonds it always causes a bit of stir and sends all the nervous nellies scurrying for the exit. And why beat up Aviva? company is being turned around is n't it. Corrections are good corrections are healthy nothing goes up in a straight lne but I doubt that there has been much volume to back up your panick selling argument.

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Dividend Income investor.com

Feb 04, 2013 at 17:31

With the Chicago Board Options Exchange Volatility Index, or VIX (the fear index), having reached a five-year low, earlier in January, in general, with regards to share price appreciation, I am rather bearish on global markets.

With regards to the London Stock Market there still remain a number of bubbles in the UK that need deflating. The worst case scenario for the London Stock Market is that when these all come together, both in the UK and elsewhere, and, more or less at the same time, stock markets around the globe will have a tough time.

It may not happen in 2013, but it will happen at some point. It’s inevitable. When it happens, once again, we will be ready for Mr Market to sell the shares of high quality dividend paying companies we want to buy at well below historically undervalued prices.

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Tony Peterson

Feb 04, 2013 at 17:46

I am very grateful for those of you who have been talking the market down as we have massive dividends from United Utilities (Friday last), BT (today) and Vodafone (Wednesday) to find new profitable homes for.

It is looking like Aviva might be the pick of choice on Wednesday, but what you all do tomorrow could alter our choice. Our thanks to all you bears.

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Hilary hames

Feb 04, 2013 at 22:00

Reading the article I can understand most of the falls but why Aviva - had it gone up a bit rapidly? Also Carillion dropped badly today presumably due to its association with construction?

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