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FTSE slides amid bitter aftertaste from euro summit
by Max Julius on Dec 12, 2011 at 09:32
Britain’s FTSE 100 fell below the 5,500 mark and eurozone government bond markets showed fresh stresses on Monday, amid fears that an EU summit last week will fail to stem the monetary union’s debt crisis.
The UK index of blue-chip shares shed 0.56%, or 31 points, to 5,498 and the All Share index was off 0.57%, or 16 points, to 2,824. See the FTSE’s performance and the index’s top winners and losers
Talks of ‘little practical value’
During the summit in Brussels, EU nations committed to stricter budget rules and more co-ordination that would likely be adopted by 26 member states, but the use of a veto by Britain will make implementation of such moves more difficult than hoped.
The summit also agreed up to €200 billion (£171 billion) in bilateral loans to the International Monetary Fund (IMF) to help tackle the crisis.
‘In our view, the latest “final and comprehensive” resolution of the eurozone crisis... manages the unique trick of being simultaneously one of the most important ever agreements binding together European countries and of little practical value in fighting existential fire consuming the eurozone,’ wrote Viktor Shvets, strategist at Samsung Securities.
Mothercare bid speculation
Eurasian Natural Resources Corp (ENRC.L) was the top faller, dropping 28p to 657p, as the miner probed allegations of corruption at a Kazakh iron ore subsidiary.
Financials were also among the biggest losers, on fears over Europe. Lloyds (LLOY.L), another Citywire Top Stock, slid 0.5p to 26.1p and Aviva (AV.L) slipped 6p to 315p. Royal Bank of Scotland (RBS.L) shed 0.5p top 21.5p as a report said poor management decisions and flawed regulation dragged the bank to the brink of collapse three years ago.
On the FTSE 250, Mothercare (MTC.L) surged 12p to 172p following reports that private equity group Cinven is planning a break-up bid for the ailing baby goods chain.
Sanjay Vidyarthi, analyst at Espirito Santo Investment Bank, said speculation over a private equity bid was ‘inevitable’ in light of the recent share price decline, the vulnerability of the company in the absence of a chief executive, and the attractions of the brand and the international franchise business.
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After a record year for inflows and market-leading performance in 2012, emerging market debt has taken a large step towards the mainstream. Our recent debate covers the outlook for the asset class this year and where opportunities can be found.