Barclays Plc (BARC) led banks lower, retreating more than 6 percent in London as the cost of insuring against a sovereign default in Europe surged. Vedanta Resources Plc (VED) and BP Plc (BP/) led a selloff by commodity producers as oil and metal prices fell.
The benchmark FTSE 100 sank 2 percent to 5,465.52 at the close in London, its lowest level since Dec. 22, as only four companies advanced. The FTSE All-Share Index lost 1.9 percent today, while Ireland’s ISEQ Index slid 2.1 percent in Dublin.
“I can’t see even after the next Greek election a government appearing that will be able to do anything else than perhaps manage the Greek exit,” said Simon Sole, chief executive officer of Exclusive Analysis Ltd., in an interview on Bloomberg Television. “And now the European Central Bank today is postulating that that might be how this ends up. That’s the best that they can hope for I think.”
The FTSE 100 (UKX) has fallen 8.4 percent from its 2012 high on March 16, erasing all of its gains this year, amid renewed concern that the euro area has yet to contain its sovereign-debt crisis. The gauge sank 1.4 percent last week as investors waited to see whether Greece would form a government and as Spanish credit risk surged.
Possible Euro Exit
European Union officials have begun to assess the fallout from Greece’s possible withdrawal from the euro, even as the country’s politicians struggled to form a government.
Greek President Karolos Papoulias was due to hold further meetings today after Syriza, the country’s largest anti-bailout party, rejected a unity government following last week’s inconclusive elections. The Mediterranean nation moved closer to a new vote and to the possibility of leaving the euro.
Euro-area finance ministers met in Brussels today where they may discuss the international bailout for Greece, as well as Spain, where the government last week began its fourth attempt to clean up the country’s banks.
Meanwhile in Germany, Chancellor Angela Merkel’s party lost an election in the country’s most populous state. Support for Merkel’s Christian Democratic Union fell to the lowest level since World War II.
Merkel had headlined nine campaign rallies in 27 days in North Rhine-Westphalia in a bid to regain the state, the first the CDU lost in 2010 as the debt crisis erupted and voters rebelled against bailing out Greece. The SPD now holds power in 11 of Germany’s 16 states.
Barclays, RBS Slide
Barclays paced a selloff in European lenders, falling 6.4 percent to 189.8 pence. Royal Bank of Scotland Group Plc (RBS) slid 4.8 percent to 21.85 pence, Lloyds Banking Group Plc (LLOY) declined 5.5 percent to 29.38 pence and HSBC Holdings Plc (HSBA), Europe’s largest bank, slid 1.5 percent to 545.8 pence.
Lenders retreated as the Markit iTraxx SovX Western Europe Index of credit-default swaps on 15 governments jumped 7.5 basis points to 293.5 at 3:15 p.m. in London. Contracts on Spain soared as much as 26 basis points to a record 543, according to Bloomberg data.
Vedanta fell with copper, sliding 3.3 percent to 1,053 pence. BHP Billiton Ltd. (BHP), the world’s largest mining company, declined 3.5 percent to 1,798 pence and Anglo American Plc slipped 3.1 percent to 2,119 pence.
Metal Prices Drop
Copper sank to a four-month low on the London Metal Exchange, on concern that a cut in the reserve requirement for China’s banks indicates that the slowdown in the world’s second-largest economy is steeper than forecast. Zinc, lead and nickel also retreated.
The People’s Bank of China said on May 12 it will cut banks’ reserve-requirement ratio by 50 basis points from May 18.
Lonmin Plc (LMI) slumped 5.2 percent to 854 pence after the world’s third-largest platinum producer posted an unexpected first-half loss of 6.9 cents a share, excluding one-off items. That compared with the median estimate for profit of 9 cents.
BP retreated 2.7 percent to 403.9 pence, Royal Dutch Shell Group Plc declined 2.5 percent to 2,015 pence and BG Group Plc (BG/) slipped 3.5 percent to 1,290 pence.
Chariot Oil & Gas Ltd. (CHAR) plunged 50 percent to 75 pence, the lowest price since the company listed in 2008, after failing to find hydrocarbons at an exploration well off the coast of Namibia and abandoning the block.
Moneysupermarket.com Plc, a price-comparison website, declined 8.1 percent to 116.2 pence after Numis Securities said a new service from Google Inc., the owner of the world’s most popular search engine, may put about two-thirds of the U.K. company’s profit at risk.
Invensys, Rank Group
Invensys Plc paced advancing shares, rallying 3.2 percent to 209 pence after the Sunday Times said that Siemens AG, ABB Ltd., Emerson Electric Co. and General Electric Co. may bid for the company. The newspaper didn’t say where it obtained the information.
Rank Group Plc (RNK) gained 5.8 percent to 123.5 pence after the U.K. gambling company conditionally agreed to buy the casino unit of Gala Coral Group Ltd. for 205 million pounds ($330 million).
C&C Group Plc (GCC) added 0.8 percent to 3.60 euros in Dublin trading. The Irish Independent reported that SABMiller Plc and Carlsberg A/S have examined the company since the start of the year. The newspaper didn’t identify its sources.
To contact the reporter on this story: Sarah Jones in London at email@example.com
To contact the editor responsible for this story: Andrew Rummer at firstname.lastname@example.org