US bank charge sends FTSE 100 into slide

News of a shock fraud charge lodged against US investment bank Goldman Sachs sent London's FTSE 100 Index falling today.

The Footsie tumbled by 1.7% at one stage in late afternoon trading after America's Securities and Exchange Commission accused the Wall Street giant of defrauding investors in its disclosures about securities sold that were tied to sub-prime mortgage securities.



The civil fraud charge caught markets by surprise on both sides of the Atlantic as investors feared further fallout from the investigation.



US benchmark index the Dow Jones Industrial Average fell more than 120 points in early trade.



Joshua Raymond, market strategist at City Index, said: "This news now creates uncertainty in the market in terms of whether there are likely to be any other major banks involved or under investigation.



"Moreover, we don't know what the consequences of this charge will be for Goldman Sachs."



He added: "Whenever there is uncertainty, investors tend to run for the hills and with there likely to be more news on this over the weekend when the markets are shut, investors have sought to move out of their riskier holdings by selling the banks and the miners into the European close."



UK banks had been seeing gains for most of the session, but soon suffered sharp declines after the Goldman announcement.



Barclays fell 3%, HSBC dropped 2% and part-nationalised Lloyds Banking Group slipped 1%.



The only British bank to stay out of the red was taxpayer-backed player Royal Bank of Scotland as it clung on to gains thanks to cheery comments earlier in the session from broker Morgan Stanley.



The wider market closed 81.1 points down at 5744, mirroring falls across stock markets globally.



In Europe, France's Cac 40 suffered a 1.9% decline and the Dax in Germany was 1.8% in the red.



Oil prices also fell in reaction, down below 83 US dollars a barrel in New York trading.



Goldman's fraud charges come as the US bank earnings season gets into full swing, with Goldman itself due to report first quarter figures next week.



Fellow US group Bank of America had earlier provided some cheer from the sector after announcing a return to profit in the first three months of 2010.



But trading on Wall Street was already under pressure after Google's results failed to impress and as weak data on the US housing market hit sentiment.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksA special investigation by Andy McSmith
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Neil Pavier: Commercial Analyst

£50,000 - £55,000: Neil Pavier: Are you a professionally qualified commercial ...

Loren Hughes: Financial Accountant

£45,000 - £55,000: Loren Hughes: Are you looking for a new opportunity that wi...

Sheridan Maine: Finance Analyst

Circa £45,000-£50,000 + benefits: Sheridan Maine: Are you a newly qualified ac...

Sheridan Maine: Financial Accountant

£150 - £190 Daily Rate: Sheridan Maine: One of London's leading water supplier...

Day In a Page

No postcode? No vote

Floating voters

How living on a houseboat meant I didn't officially 'exist'
Louis Theroux's affable Englishman routine begins to wear thin

By Reason of Insanity

Louis Theroux's affable Englishman routine begins to wear thin
Power dressing is back – but no shoulderpads!

Power dressing is back

But banish all thoughts of Eighties shoulderpads
Spanish stone-age cave paintings 'under threat' after being re-opened to the public

Spanish stone-age cave paintings in Altamira 'under threat'

Caves were re-opened to the public
'I was the bookies’ favourite to be first to leave the Cabinet'

Vince Cable interview

'I was the bookies’ favourite to be first to leave the Cabinet'
Election 2015: How many of the Government's coalition agreement promises have been kept?

Promises, promises

But how many coalition agreement pledges have been kept?
The Gaza fisherman who built his own reef - and was shot dead there by an Israeli gunboat

The death of a Gaza fisherman

He built his own reef, and was fatally shot there by an Israeli gunboat
Saudi Arabia's airstrikes in Yemen are fuelling the Gulf's fire

Saudi airstrikes are fuelling the Gulf's fire

Arab intervention in Yemen risks entrenching Sunni-Shia divide and handing a victory to Isis, says Patrick Cockburn
Zayn Malik's departure from One Direction shows the perils of fame in the age of social media

The only direction Zayn could go

We wince at the anguish of One Direction's fans, but Malik's departure shows the perils of fame in the age of social media
Young Magician of the Year 2015: Meet the schoolgirl from Newcastle who has her heart set on being the competition's first female winner

Spells like teen spirit

A 16-year-old from Newcastle has set her heart on being the first female to win Young Magician of the Year. Jonathan Owen meets her
Jonathan Anderson: If fashion is a cycle, this young man knows just how to ride it

If fashion is a cycle, this young man knows just how to ride it

British designer Jonathan Anderson is putting his stamp on venerable house Loewe
Number plates scheme could provide a licence to offend in the land of the free

Licence to offend in the land of the free

Cash-strapped states have hit on a way of making money out of drivers that may be in collision with the First Amendment, says Rupert Cornwell
From farm to fork: Meet the Cornish fishermen, vegetable-growers and butchers causing a stir in London's top restaurants

From farm to fork in Cornwall

One man is bringing together Cornwall's most accomplished growers, fishermen and butchers with London's best chefs to put the finest, freshest produce on the plates of some of the country’s best restaurants
Robert Parker interview: The world's top wine critic on tasting 10,000 bottles a year, absurd drinking notes and New World wannabes

Robert Parker interview

The world's top wine critic on tasting 10,000 bottles a year, absurd drinking notes and New World wannabes
Don't believe the stereotype - or should you?

Don't believe the stereotype - or should you?

We exaggerate regional traits and turn them into jokes - and those on the receiving end are in on it too, says DJ Taylor