View the article online at http://citywire.co.uk/money/article/a550060
FTSE slides as doubts cast over dual bailout fund
(Update) UK index falls back to 5,550 on fears over dual bailout fund, and Vodafone falls 0.4% ahead of a ruling on its £7 billion tax bill.
(Update) The FTSE erased early gains as German officials poured cold water on the prospect of a dual eurozone bailout fund.
The benchmark UK index of blue-chip shares lost 0.3%, or 19 points, to 5,550 and the Mid-250 index took on 0.24%, or 25 points, to 10,287.
Markets retreated as rumours circulated that German officials will oppose a dual eurozone bailout fund, with the European Financial Stability Fund (EFSF) and the European Stability Mechanism (ESM) both providing a backstop for eurozone economies.
Randgold Resources (RRS.L) rose to the top of the FTSE 100, adding 270p, or 4%, to £69.80 after analysts at Investec placed a ‘buy’ on the stock despite its reduced production forecasts.
Insurance group Resolution (RSL.L) took on 9.2p, or 3.57%, to 266p as Deutsche Bank raised its rating on the stock from ‘hold’ to ‘buy’.
See the FTSE’s performance and the index’s top winners and losers
Among Citywire Top Stocks Burberry (BRBY.L) gained 28p, or 2.2%, to £12.95 as analysts at Liberum raised their ‘buy’ target price to £15.35. BG Group (BG.L), Weir Group (WEIR.L), Unilever (ULVR.L) and Devro (DVO.L) all rose more than 1%. Vodafone (VOD.L) was the only Top Stock to post a fall.
More stock news at the end of this report
Doubts cast on dual bailout fund
Michael Hewson, analyst at CMC Markets, wasn’t suprised by the growing doubt. ‘It’s all about expectation management on the part of unnamed German officials. Earlier there was talk of a dual bailout fund.
‘A German spokesperson has now said it is unlikely to happen: quelle surprise! Two bailout funds does seem somewhat unlikely given that policymakers can’t even fund the one they already have, namely the EFSF, properly,' he said.
The details of the proposals for strengthening the fiscal union between eurozone countries will be presented to Herman van Rompuy, president of the European Council, in a letter tomorrow ahead of the meeting.
Other stock markets in Europe also lost ground: Germany’s DAX index dropped 0.66% to 5,989, France's CAC 40 index fell 0.3% to 3,170, and the FTSEurofirst 300 index of top European shares shed 0.48% to 984.
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Look up the shares
- Burberry Group PLC (BRBY.L)
- Resolution Ltd (RSL.L)
- Micro Focus International PLC (MCRO.L)
- Carillion PLC (CLLN.L)
- Randgold Resources Ltd (RRS.L)
- BG Group PLC (BG.L)
- Weir Group PLC (WEIR.L)
- Unilever PLC (ULVR.L)
- Devro PLC (DVO.L)
- Vodafone Group PLC (VOD.L)
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