FTSE falls 1.8 percent on commodities and banks
The leading share index fell 1.8 percent early on Tuesday as persistent concerns over the impact of credit losses on financial institutions and unease over slowing economic growth hit global equities.
FTSE gains as metals spur minersBy 8:40 a.m., the FTSE 100 was down 99.6 points at 5,405.9, underperforming other major European indexes as the UK market was closed for holiday on Monday. The benchmark had rallied 2.5 percent on Friday.
"We have a reality check ... We still have got a serious credit crisis and a major banking crisis. All is not over by any stretch of imagination," said David Buik, strategist at BGC Partners.
"It seems the market is in denial that the effect of the banking and credit crisis is having on growth developments and profits. Until such time that the banks are in the position to quantify the losses and say 'that's it folks', the market is going to be like this."
Oil shares were the top-weighted loser on the index as crude prices hovered around $115 a barrel. BP, Royal Dutch Shell and gas producer BG Group shed 1.8 to 2.8 percent.
Energy services company John Wood Group slipped 2.7 percent despite posting a 44 percent rise in first-half profit and saying it expected to beat full-year expectations.
Miners also fell along with weaker metal prices. BHP Billiton, Anglo American, Lonmin, Vedanta Resources and Antofagasta declined 1.2 to 3.8 percent.
BANKS DOWN
Rio Tinto reported a 55 percent rise in first-half earnings, boosted by its takeover of Alcan last year and record iron ore production feeding Chinese demand.
Rio shares were down 2.5 percent.
Banks were the another standout loser, with Barclays, Royal Bank of Scotland, HBOS, Lloyds TSB and Standard Chartered losing between 1.9 and 2.9 percent.
HSBC bucked the weak trend in the sector, rising 0.7 percent.
U.S. stocks fell sharply overnight as credit concerns hounded financial stocks while global growth worries hurt big technology and industrial companies. In Asia, Japan's Nikkei average .N225 lost 0.8 percent.
JPMorgan Chase said the market value of its investments in Fannie Mae and Freddie Mac preferred stock has dropped by half to $600 million this quarter.
U.S. new home sales data for July and consumer confidence for August, both due at 1400 GMT, will provide further clues to the state of the world's largest economy.
Mid-cap Bovis Homes sagged 3.2 percent after the housebuilder reported a slump in first-half profit following what it called the toughest period of trading in its life as a public company.
Other housebuilders also fell, with Taylor Wimpey losing 5.5 percent, Persimmon easing 4.2 percent and Barratt Developments dropping 4.1 percent.
Bank of England Deputy Governor Charles Bean warned on Monday that the global economic slowdown was likely to "drag on for some considerable time".
Meanwhile, a survey by the Confederation of British Industry showed profitability and optimism in British's dominant services sector deteriorated sharply in the three months to August.
The International Monetary Fund has trimmed its forecasts for world economic growth in 2008 and 2009, largely due to a marked worsening in the outlook for the euro zone, a G20 finance official told Reuters on Monday.
Liberty International advanced 5.1 percent to top the FTSE 100 gainers after Credit Suisse upgraded the property firm to "neutral" from "underperform", traders said.
Liberty extended Friday's strong run after it said Simon Property Group Inc had raised its stake in the company to 3.45 percent.
(Editing by David Holmes)
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