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Global markets slide as Spain formally requests bank aid

MARKET BLOG: US Dow joins other markets in the red as Spain’s finance minister asks for €100 billion to recapitalise the nation's banks.

 
Global markets slide as Spain formally requests bank aid

15.18: Everything is pointing downwards today, a rough start to the week reflecting dampened expectations of any action from the major European leaders' summit in a few days. US markets have joined European markets on the sharp downward slope, with the Dow off 1.2%. Oil prices are also lower, with Brent crude futures down at $90.4 per barrel. And Spanish borrowing costs have been edging higher all day, with 10 year bond yields now above 6.6%.

Analysts at Societe Generale last week produced a helpful crib sheet on the options to save the eurozone - many of which either look unlikely or would not fix the crisis.

Rescue options: Click to enlarge

Spain formally requests banking bailout

11.48: European markets are down after Spain formally requested €100 billion (£80 billion) to recapitalise its indebted banks.

Luis de Guindos, Spanish economy minister, said the country is aiming to agree conditions and sign for the loan before the next meeting of eurogroup finance ministers on July 9. 

The money will be used to bail out the banking sector, following last week’s independent report which found it required €62 billion (£50 billion), and provide a buffer from further bad debts.

European markets fell: Germany’s DAX index dropped 1.63% to 6,162, France's CAC 40 index shed 1.7% to 3,040, and the FTSEurofirst 300 index of top European shares gave up 1.04% to 1,003.

Britain’s FTSE 100 also continued its downward trend to lose 0.6%, or 34 points, to 5,481 points. The FTSE 250 lost 0.45%, or 48 points, to 10,776.

Morrisons loses its finance director, Shire slides, FTSE weak

8.30: Morrisons (MRW.L) falls after announcing group finance director Richard Pennycook will leave the supermarket group next June. Pennycook, who has been with the firm for eight years, wants to concentrate on building 'a portfolio career'.

The shares fell 2% or 5.5p to 263p. Oriel Securities said it was 'bad news' as Pennycook had overseen the integration of Safeway's into the business. Last month the group reported a 1% fall in first quarter sales. 'Our view is, though, that MRW's growth profile is weak, a view he might share.'

BT (BT.L) sheds 1.5% or 3p to 202p on reports the Competition Commission has rebuffed the telecom group's attempt to get rivals to pay more for use of its phone lines as a way of reducing its £3 billion pension deficit.

SABMiller (SAB.L) drops 2% or 48.5p to £24.55 after Liberum downgrades the beer company to 'sell' from 'hold'.

Hammerson (HMSO.L) rises 0.5% or 2.2p to 429p after Morgan Stanley raises the property group to 'overweight'.

8.10: Shire (SHP.L) slumps 9% in early trading on news that US regulators have allowed Watson Pharmaceuticals in the US to launch a generic version of its best-selling hyperactivity drug Adderall.

The Food and Drug Administration has dismissed an appeal by Shire to block the launch. The move is a blow to Shire, which dropped out of Citywire Top Stocks this month, although the company says it will still deliver good earnings growth this year.

Shares in Shire fell around 9%, or £1.73, to £17.82.

Meanwhile the FTSE 100 got off to a hesitant start, down 20 points, or 0.4%, to 5,492 amid scepticism about the chances of this week's European Union summit grappling with the eurozone crisis and prevent a sharp global slowdown.

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