UK markets finished lower yesterday, paring early gains, after Germany damped expectations for a complete solution to the eurozone debt crisis at the forthcoming European Union summit.
Security services contractor, G4S, the top laggard on the FTSE 100 index, slumped 22.1%, after it agreed to acquire Danish facilities services provider ISS.
Among mining stocks, Rio Tinto, Xstrata and Antofagasta declined between 1.3% and 3.6%, as base metal prices fell.
Financial stocks, Legal & General, Royal Bank of Scotland and Lloyds Banking declined between 0.6% and 2.5%, as worries about the eurozone debt contagion increased.
Fund manager, Schroders dropped 1.3%, after UBS downgraded the stock to “Neutral” from “Buy”.
Oil industry services group, AMEC, firmed up by 1.7%, after it bagged a contract worth £150 million.
FTSE 100 dipped 0.5% or 29.7 points to settle at 5,436.7, while FTSE 250 retreated 0.9% or 88.1 points to close at 10,250.4.
European Trading Review
European markets ended lower yesterday, led by sharp declines in banking sector stocks, as hopes for an end to the eurozone debt crisis faded. This came after German Chancellor Angela Merkel warned investors that European leaders would not provide a comprehensive fix to the regions debt crisis at their next meeting.
Banks, National Bank of Greece, Piraeus Bank and EFG Eurobank Ergasias plunged between 9.1% and 10.0%, as concerns mounted that Greece would default.
BNP Paribas dropped 3.7%, after Standard & Poor’s Ratings Services downgraded the lenders credit rating by one notch, late Friday.
Deutsche Bank fell 3.1%, amid reports that the bank’s exposure to Las Vegas casinos has reached €4.9 billion, as large as its exposure to the eurozone debt crisis.
Royal Philips Electronics slipped 1.9%, after the company reported a steep drop in its third-quarter earnings.
FTSEurofirst 300 index slipped 1.0% to 966.0. German DAX Xetra 30 dropped 1.8% to 5,859.4. French CAC-40 closed 1.6% lower at 3,166.1.
US Trading Review
US markets plunged yesterday, after comments by a German official damped optimism of an imminent solution to the European debt crisis at the European Union summit.
Among home builders, Pulte Group, the top laggard on the S&P 500 index, plunged 9.5%, while Beazer Homes USA and KB Home declined 4.3% and 5.8%, respectively, as Fitch lowered its ratings on their debt.
Wells Fargo retreated 8.4%, as its third-quarter earnings missed market expectations.
Canadian Solar plummeted 13.7%, after it slashed its third-quarter earnings outlook.
Freeport-McMoRan Copper & Gold declined 4.5%, as it postponed production at its Grasberg mine in Indonesia.
Citigroup slipped 1.7%, after S&P Equity Research cut its target price on the stock.
Dow Jones plunged 2.1% to 11,397.0. NASDAQ shed 2.0% to 2,614.9. S&P 500 lost 1.9% to 1,200.9.
Forex Trading Review
At 0400 BST today, the GBP is trading 0.3% higher against the USD at $1.57882, 0.1% up against the EUR at €1.1467 and 0.2% higher against the JPY at ¥ 121.28.
The EUR is trading 0.2% higher against the USD at $1.37691.
The EUR is trading 0.1% higher against the JPY at ¥105.741.
The JPY is trading lower against most currencies amid speculation that housing starts in the US rose in September.
The NZD is trading higher against the USD, after New Zealand’s central bank indicated that interest rates would probably need to be increased.
Yesterday, the GBP ended lower against the USD, after Ernst & Young LLP’s ITEM Club cut its UK growth forecast and stated that the Bank of England should lower its main interest rate.
The EUR ended lower against the USD, after German Chancellor Angela Merkel dampened hopes that European leaders would arrive at a complete fix to the eurozone debt crisis at their next meeting, decreasing the demand for high yielding assets.
The EUR also closed lower against the USD, after a report showed that US Industrial production rose 0.2% in September.
Commodities Trading Review
In Asia, crude oil for November delivery is trading 8 cents lower at $86.30 per barrel.
Yesterday, crude oil for November delivery closed 0.5% or 42 cents lower at $86.38 per barrel, amid worries over demand prospects. This came after German Chancellor Angela Merkel warned investors that European leaders are unlikely to provide a complete solution to the eurozone debt crisis.
Gold for immediate delivery is trading 0.1% lower today, at $1,672.11 per ounce.
Gold prices for December delivery fell 0.4% or $6.40 to $1,676.60 per ounce yesterday. This came as the dollar rose against the major currencies, decreasing the demand for the precious metal as a hedge against inflation.
Financial Trading News
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'Commodities Spread Betting: Merkel Comments See Crude Oil Weaken' edited by ETX Capital, updated 18-Oct-11
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