U.K. stocks declined for a second day, led by banking shares, amid concern Europe’s sovereign-debt crisis will worsen.
Royal Bank of Scotland Group Plc and Barclays Plc fell more than 6 percent. Antofagasta Plc slid 5.2 percent as Citigroup Inc. advised selling shares of the copper producer.
The FTSE 100 fell 189.45 points, or 3.6 percent, to 5,102.58 at the 4:30 p.m. close in London. The measure slumped 7.2 percent last month, the most since February 2009, as concern that the global economic recovery is faltering and Europe’s sovereign debt crisis is spreading wiped more than $300 billion off the value of U.K. shares. The FTSE All-Share Index dropped 3 percent today, while Ireland’s ISEQ Index declined 3.1 percent.
“There is a serious risk of a further escalation of the crisis,” Tammo Greetfeld, a Munich-based equity strategist at UniCredit SpA wrote in a report. “We remain underweight euro zone equities and reiterate our cautious stance.”
The FTSE 100 climbed 3.2 percent last week after the August slump dragged equities to their cheapest price-to-earnings ratio since March 2009.
RBS slid 12 percent to 21.78 pence. Barclays lost 6.7 percent to 154.15 pence. Bank stocks declined across western Europe after 17 lenders, including RBS and Barclays, were sued by the U.S. over the sale of mortgage-backed securities and on continuing investor concern over interbank lending.
“This is really about fears about liquidity and solvency now,” said Andrew Lim, a banking analyst at Espirito Santo Investment Bank. “U.S. money markets are lending less for a second month to European banks, particularly French banks. Banks are having to come back to the market to complete their 2011 borrowing programs and if they fail in that respect that’s going to create a lot of risk.”
Antofagasta retreated 5.2 percent to 1,233 pence as Citigroup downgraded the shares to “sell” from “hold.”
Berkeley Group Holdings Plc rallied 4.8 percent to 1,236 pence as the U.K.’s largest homebuilder by market value said it may reach a goal of doubling pretax profit two years earlier than forecast as sales improved.