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Banks weigh on FTSE as investors stay cautious

Banks weigh on FTSE as investors stay cautious

Banks have dragged the FTSE 100, as investors remained cautious following Friday's sell-off ahead of a week when central bankers are likely to set the agenda for markets.

The UK blue-chip index fell 15 points, or 0.2%, to 7,308, with lenders among the biggest fallers. Royal Bank of Scotland (RBS) fell 1.4% to 254p and Barclays (BARC) was down 1.2% at 193.3p.

That follows Friday's fall, when most FTSE 100 stocks fell and gold jumped, as investors reacted to the terror attacks in Spain.

The FTSE 100 has now returned to the levels seen as tensions between the US and North Korea escalated earlier this month.

'Stock markets are lower today as tensions between the US and North Korea are still simmering away in the background,' said David Madden, market analyst at CMC Markets UK.

'The two nations are locked in a stalemate, and this week we will see the US and South Korea engage in their 10-day military exercises. The annual exercise always angers the North Korean regime, this time the stakes are higher given the current environment.'

Investors meanwhile have an eye on the Jackson Hole symposium of central bankers, which kicks off on Thursday.

But Deutsche Bank's Jim Reid said this was unlikely to deliver news of the European Central Bank (ECB) 'tapering' its bond-buying quantitative easing (QE) programme.

'There might be a few less nerves about the next few days in markets than many felt a few weeks ago,' he said.

'Back then, Thursday's commencement of the annual Jackson Hole symposium seemed to be a natural place for [ECB president Mario] Draghi to signal that exit from QE was soon to be accelerated. However a combination of still-soft global inflation data and the euro's recent ascent has made it unlikely that the event will be a watershed moment.'

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