FTSE dives into the red
Friday 26 November 2010
London's FTSE 100 Index tumbled into the red today as fears over a mounting eurozone debt crisis sent stock markets and the euro plunging.
The focus moved to Portugal as reports suggested its partners in the European Union were urging the country to seek a bail-out.
Spain and Ireland also saw government bond yields - an important indicator of confidence - spike amid a sell-off by anxious investors.
Stock markets across Europe dived as concerns of debt contagion hit sentiment.
The Footsie dropped nearly 100 points, or 1.7%, while Germany's DAX fell 1.1% and the CAC-40 in France was 1.6% lower.
The euro meanwhile dropped against most major currencies, including the pound, dollar and yen.
Markets and the euro have been under pressure since last week, when Ireland's debt crisis once again came under the spotlight.
The FTSE 100 Index lost 4% over a week and then made some gains before suffering fresh losses today.
Banks led the retreat on bank exposure worries, with part-nationalised Lloyds and Royal Bank of Scotland losing nearly 5% and 4% respectively. Barclays dropped nearly 4% and HSBC lost 2%.
The Portuguese parliament is voting later on billions of euros of proposed austerity measures. Analysts believe it will be the next in line for a bailout.
It was reported some eurozone countries and the European Central Bank are putting pressure on the country to ask for financial assistance, but the Portuguese government has rejected these claims.
In Ireland, the Government is negotiating with the EU and the International Monetary Fund (IMF) over a rescue package expected to amount to 85 billion euros (£72 billion).
It will be the second eurozone economy to be rescued after Greece was granted a 110 billion-euro bailout over the summer.
Kathleen Brooks, research director with foreign exchange service Forex, said it was unclear where the crisis would spread.
She said: "Whereas the Greek crisis and the start of the Irish crisis were concerned with individual sovereigns and their problems, the current chapter of Europe's sovereign woes has turned into a periphery-wide issue where no one is safe."
As if Europe's debt crisis was not enough, tensions on the Korean peninsula ratcheted up again after fresh artillery fire was heard hours after North Korea warned it was on the brink of war.
The current bout of unease started on Tuesday when four South Koreans were killed after North Korea unleashed a brief hail of artillery against the small South Korean island of Yeonpyeong.
The safe-bet dollar strengthened as the crisis re-emerged, which put pressure on commodity prices and saw mining companies retreat, with Antofagasta and Vedanta Resources topping the FTSE 100 fallers board.
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