Market update - 24 February

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The Independent Online

The FTSE 100 was 43.37 points behind at 3807.84 while the FTSE 250 retreated to 5828.19, down 91.77 points, at around noon.

The London market eased in response to some hefty overnight in falls on Wall Street, where the benchmark Dow Jones Industrial Average sunk to a 12-year low amid yet more turmoil in the American financial system. Investors sold on concerns for AIG, the insurance giant which is in talks for another government-sponsored bailout, and Citigroup, the banking giant which is staring effective nationalisation in the face.



The worries took the steam out of UK-listed financials, which had rallied strongly in the session before. Legal & General was amongst the biggest losers – the insurer, which closed with gains of just over 5 per cent last night, was down over 7 per cent or 2.7p at 33.9p while the Lloyds Banking Group fell to 54p, down almost 5 per cent or 2.8p.



Traders had their eyes on the FTSE 100 index, which is now less than 30 points away from the low of 3780.96 struck last November, its worst showing since the onset of the credit crunch.



Moving up



Royal Bank of Scotland was the sole riser in the banking sector, adding 2.8 per cent or 0.6p to 21.8 as investors awaited details on its restructuring plan, which will see the business isolate its toxic unwanted assets into a so-called “bad bank”. More news is expected on Thursday, when RBS posts full year results.



Moving down



The mining sector was on the back foot as the sudden escalation in the financial crisis prompted renewed concern for the world economy and its appetite for commodities. Steel producer Vedanta Resources was amongst the weakest here, losing over 6 per cent or 33.5p to 521p after Citigroup reduced its target price for the stock to 725p from 790p.



“The steel market is a fast changing market and the balance between contract-sales and spot sales is changing just as rapidly,” the broker said,

“Vedanta is more dependent on spot prices than peers and also has greater sales-volume risk than peers.”

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