Bank shares slide over US fears
Monday 25 July 2011
Banking shares suffered more heavy losses today as traders continued the countdown to potential financial meltdown in the United States.
The FTSE 100 Index was only slightly lower late in the session as the weighty mining sector and safe-bet utility firms helped offset greater losses.
But the ongoing deadlock between politicians over lifting the debt limit in the United States to avoid a default coupled with another damning debt downgrade for Greece to rock traders' confidence.
Ratings agency Moody's cut Greece's debt to two notches above default status, sparking further concerns over the eurozone debt crisis.
Moody's also warned the latest rescue package from the EU for Greece could lead to downgrades in other countries because of the precedent for further bail-outs.
Shares in the banking sector plunged by as much as 5% on the London market as the crisis in the US and Moody's latest move concerning Greece shook confidence in the industry.
Barclays sank to the bottom of the shares index, falling nearly 4%, while Lloyds Banking Group and Royal Bank of Scotland suffered similar falls.
US lawmakers hoped to reach a compromise on lifting the debt ceiling yesterday, but the talks stalled.
President Barack Obama wants to raise revenues by letting tax cuts for high-earning Americans expire, while the opposing Republican party is fighting for more spending cuts and have rejected higher taxes.
The US will not have enough cash to meet its debt payments if an agreement is not made by August 2 - which could send shockwaves through global financial markets.
Ben Potter, market strategist for IG Markets, warned concerns over the debt deadlock in the US would continue.
He said: "The only thing you can be assured of over the coming hours and days is volatility as the political posturing continues in the US."
In Greece, Moody's risked angering the Government which has attacked credit agencies for adding to instability in the eurozone by downgrading debt.
Moody's said the new EU package of measures for Greece implies "substantial" losses for private creditors and as a result, cut its rating by three notches.
The EU and the International Monetary Fund (IMF) agreed to give Greece a second bailout worth 109 billion euros (£96 billion), on top of the 110 billion euros (£97 billion) granted in rescue loans a year ago.
Financial markets have experienced losses in recent weeks as fears that much bigger economies such as Spain and Italy may follow in the footsteps of Ireland, Portugal and Greece.
- 1 Sofyen Belamouadden murder: The inside story of a crime that horrified Britain
- 2 How to turn off/stop 'seen by' on Facebook: Disable it to make your chats seem less passive aggressive
- 3 Company breaks open Apple Watch to discover what it says is 'planned obsolescence'
- 4 'We're not heroes, just tourists': Swedish police officers on holiday stop vicious assault on New York subway
- 5 Buckingham Palace guard who attacked passers-by in 'most most violent piece of CCTV footage' police officer had seen walks free
The sickening truth about food banks that the Tories don't want you to know
Migrant boat disaster: Ukip candidate mocks victims in sickening Twitter post
Nigel Farage wants the BBC to stop making programmes like Doctor Who, Strictly Come Dancing, and Top Gear
Global warming: Scientists say temperatures could rise by 6C by 2100 and call for action ahead of UN meeting in Paris
General Election 2015: Britain would become a 'communist dictatorship' under Ed Miliband and Nicola Sturgeon, claims wife of Michael Gove
Rupert Murdoch berated Sun journalists for not doing enough to attack Ed Miliband and stop him winning the general election
iJobs Money & Business
£24000 - £26000 per annum + benefits : Ashdown Group: A highly successful, glo...
£50000 - £55000 per annum: Ashdown Group: Business Analyst - Financial Service...
£18000 - £23000 per annum + OTE £45K: SThree: At SThree, we like to be differe...
£20000 - £25000 per annum + competitive: SThree: Did you know? SThree is the o...