FTSE opens with more heavy losses

London’s leading shares index sustained more heavy losses today as the turmoil
engulfing world markets showed no signs of easing.

The FTSE 100 Index opened more than 2.5% lower – off 140 points at 5253 – amid
investor panic over the deepening eurozone debt crisis and health of the US
economy.

The FTSE 100 registered its biggest fall of the year yesterday – shattering
pensions and savings funds as it wiped £50 billion off its value – while
Wall Street’s Dow Jones Industrial Average plunged 4.3%, one of its worst
ever falls.

The picture was just as bleak in Asia where Japan’s Nikkei 225 slid 3.7% and
Hong Kong’s Hang Seng dropped 5%.

The plunge in share prices came amid rising fears that Italy and Spain, the
eurozone’s third and fourth largest economies, could default on their debt
and require EU-funded bailouts.

The FTSE 100 Index plunged to its lowest levels since early September last
year, while Germany’s DAX fell 2.7% and the Cac-40 in France dropped 2.2%.

The banking sector suffered the greatest falls in London – including a 14%
drop for Royal Bank of Scotland, which today published half-year results
revealing a £794 million loss.

Lloyds Banking Group fell 10% to around half the price the Government paid for
its shares in its £21 billion bailout while Barclays also dropped 10%.

European fears were heightened yesterday after the cost of borrowing for the
Spanish government rose sharply in a debt auction – indicating lenders have
lost confidence in the country’s ability to handle its debts and avoid a
bailout.

But the focus today will return to the US, where worried traders are waiting
for the latest unemployment figures, which are expected to show weak job
growth and a rise in the unemployment rate.

Richard Hunter, head of UK equities at Hargreaves Lansdown Stockbrokers, said: “The
markets are in catch-up mode in early trade, having missed some of the late
sell off in the US and a weak overnight performance in Asia.

“The FTSE 100 currently stands 11.4% down for the year, with an across
the board markdown this morning.”

World markets have been on a downward trajectory in recent weeks as the US
debt crisis added to ongoing concerns in Europe.

The vast spending cuts outlined in America’s debt-limit deal raised fears over
the world’s biggest economy falling back into recession.

Meanwhile, some traders and analysts are expecting the US to be stripped of
its AAA credit rating, in light of recent weak economic data and its
debt-laden public purse.

Elsewhere, European Commission president Jose Manuel Barroso fuelled fears
after he called for a “rapid reassessment” of the eurozone’s
multi-billion euro rescue fund as he said new powers granted just two weeks
ago were insufficient to contain the current crisis.

The FTSE 100 Index closed down 3.4% last night – its biggest daily drop since
March 2009.

The Dow Jones lost 512.76 points, which was the steepest points fall since
December 2008. It was the ninth worst fall by points for the Dow.

Downing Street said there were “absolutely no plans” for Prime Minister David
Cameron to cut short his family holiday in Italy to deal with the recession
fears.

Chancellor George Osborne is also enjoying a foreign break – in The United
States – while Deputy Prime Minister Nick Clegg is due back from time off in
Spain and France on Sunday.

The senior trio’s absence at the same time has led some critics to question
the Government’s ability to handle the potential impact of the global
economic situation on the UK.

“They are being kept abreast of it all,” a Number 10 spokeswoman insisted –
adding that the premier remained in charge at all times despite being out of
the country.