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FTSE 100 hit by U.S. debt rating concerns
Britain's FTSE 100 index traded lower on this morning, echoing overnight falls in Asia after Moody’s decision to review the United States' Aaa rating. Following the closure of Wall Street on Wednesday, Moody’s disclosed that it might cut the U.S. rating if lawmakers failed to agree to raise the country's debt ceiling.
As a result, the FTSE fell 23.28 points (0.4%), to 5,883.15 by 8:41 a.m., impacting on the previous days 0.6% rise. With concerns on the financial status of Italy and continued instability of Greece’s economy there is worry of ‘contagion’ within the Euro zone.
Greece's Prime Minister, George Papandreou, said the Euro zone and International Monetary Fund (IMF) must approve a second bailout for his country quickly to avoid its economic reform plans collapsing, a German newspaper reported.
In positive news, shares in Associated British Foods rose 6.1% percent after a third-quarter update, which Investec described as "decent," although it did not anticipate any changes to its 2011 numbers and remained "happy buyers."
Europe's biggest home improvements retailer Kingfisher, rose 0.9% and British engine maker Rolls Royce added 0.6%, as JP Morgan raised its recommendations on the companies to "overweight."
Despite the difficulties being encountered by News Corp’s big for the broadcaster and their subsequent withdrawal to buy BSkyB, their shares also climbed 0.4%, extending the previous session's gains.
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Britain's FTSE 100 index traded lower on this morning, echoing overnight falls in Asia after Moody’s decision to review the United States' Aaa rating. Following the closure of Wall Street on Wednesday, Moody’s disclosed that it might cut the U.S. rating if lawmakers failed to agree to raise the country's debt ceiling.
Further to the announcement by the European Banking Authority (EBA) on Friday that 8 banks within the euro zone had failed the European Union’s stress test (total capital shortfall of €2.5 billion), banks with substantial peripheral euro zone bond holdings, and those that only scraped through the European Union's stress test of 90 lenders, started to feel pressure from investors to ‘beef up’ their capital buffers.
