Citywire for Financial Professionals
Stay connected:

View the article online at http://citywire.co.uk/money/article/a555609

Pound hits 15-month high vs euro as debt woes slap markets

European banks park record level of funds at ECB overnight; oil gains as EU reaches preliminary deal to ban imports of Iranian crude.

 
Pound hits 15-month high vs euro as debt woes slap markets

The pound surged against the euro and global stock markets fell back on Wednesday, on renewed fears over the health of the eurozone’s banking system.

Sterling jumped 0.73% versus the single currency to €1.208, after hitting a €1.21, its highest since September 2010. The euro also slumped 0.95% against the dollar to $1.293.

The euro’s losses came after a deeply discounted rights issue from Italian bank UniCredit. Meanwhile, European banks parked a record €453 billion (£375 billion) in funds at the European Central Bank (ECB)'s overnight deposit facility, highlighting fears banks have about lending to one another in the debt crisis.

‘If banks aren’t willing to use the massive boost in cash that the ECB lent them just before Christmas to either buy peripheral debt or deposit with other institutions earning more interest, then that tells you something worrying about the state of the sector,’ said Angus Campbell at Capital Spreads.

Retailers retreat

Elsewhere, Britain’s FTSE 100 index of blue-chip shares slipped 0.55%, or 32 points, to 5,668 – pulling back from Tuesday’s 10-week high – and the All Share index faded 0.59%, or 17 points, to 2,906. See the FTSE’s performance and the index’s top winners and losers

Campbell said: ‘For at least 48 hours though investors focused on something different which had been the improvement in economic data providing an excuse to buy equities, but the party seems to now be over as sovereign debt concerns remerged today.’

Next (NXT.L) topped the loser board on the FTSE 100, giving up 85p to £25.56, in the wake of disappointing results from the retailer. Rivals Marks & Spencer (MKS.L) and Wm Morrison (MRW.L) lost 8p to 309p and 6p to 322p respectively.

Resources stocks were also among the index’s top casualties, trimming the previous session’s strong gains. Glencore (GLEN.L) dropped 13p to 405p and Antofagasta (ANTO.L) shed 36p to £12.69.

Defensives were prominent on the leader board, with United Utilities (UU.L) adding 9p to 621p and Severn Trent (SVT.L) hardening 17p to £15.37.

Oil climbs higher

Stock markets elsewhere in Europe dropped: Germany’s DAX index was 0.89% lower at 6,112, France's CAC 40 index fell 1.59% to 3,194, and the FTSEurofirst 300 index of top European shares weakened 0.62% to 1,022.

Meanwhile, Brent crude for delivery in February rose 0.33% to $112.50 per barrel, extending the previous session’s gains, after the European Union reached a preliminary deal to ban imports of Iranian oil.

Across the Atlantic, Wall Street also suffered, even as a report showed that orders to US factories rose in November by the most in four months.

Sign in / register to view full article on one page

leave a comment

Please sign in here or register here to comment. It is free to register and only takes a minute or two.

News sponsored by:

The Citywire guide to investment trusts

In association with Aberdeen Asset Management

Fund managers from Standard Life Investments quizzed on investment trusts


What can SLI bring to the table for those who want to put their money into investment trusts?

More about this:

Look up the shares

  • Next PLC
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • Marks And Spencer Group PLC
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • Standard Life PLC
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • WM Morrison Supermarkets PLC
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • Glencore International PLC
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • Antofagasta PLC
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • United Utilities Group PLC
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • Severn Trent PLC
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them

More from us

Archive

Today's articles

Tools from Citywire Money

From the Forums

+ Start a new discussion

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 noreply@emails.citywire.co.uk to your safe senders list so we don't get junked.

Sorry, this link is not
quite ready yet