LONDON, July 20 (Reuters) - Britain's FTSE 100 ended lower
ay, halting a run of six weekly gains, as Spain's
financial outlook took a fresh hit, pushing its yields to a new
record high and hitting bank stocks across Europe.
Royal Bank of Scotland, Barclays and HSBC were all down 2.5 percent to 3.5 percent, taking 14.5
points off the broader index after the sector slid in line with
The STOXX Europe 600 Banks index, which includes UK
firms, ended down 3.7 percent, while the euro zone-focused index slid 6.1 percent after news that Spain's Valencia region
was applying for a bailout from Madrid hit the country's bonds.
'We saw the market coming back to the 5,600s as Spanish
yields did not head south of 7 percent,' Octopus fund manager
Bish Limbu said.
Until the region's permanent bailout fund, the ESM, is ready
to buy Spanish bonds, Limbu said, 'yields will continue to creep
up like that and so equity markets will continue to fall when
Weakness in the financials proved the main drag on the
broader index, sending the blue-chip FTSE 100 down 62.42
points, or 1.1 percent, to 5,651.77 points.
That late run into the red left the index down 0.3 percent
for the week and meant it failed to chalk up a seventh straight
week of higher closes, a feat last achieved in mid-2005.
British insurer Resolution led fallers across the
index for most of the session, losing 5.4 percent in heavy
volume at more than three times its 90-day daily average after
it canceled a planned share buyback.
Leading blue-chip Vodafone also suffered in the
tough European trading conditions that have contributed to a
series of weak corporate outlooks from across the region in the
current earnings season.
Hurt by weak demand in debt-saddled Europe and an unexpected
slowdown in emerging markets, it posted a sharp drop in
quarterly growth and said it would launch a new round of cost
At the same time as many firms are reporting cautious
outlooks and defensive stocks remain popular, analysts at UBS
suggested buying into sectors that could be early beneficiaries
of any bottoming in the weak economic data.
Matthew Gilman, strategist at the bank, wrote that retail,
leisure, housebuilders and media were all sectors that tended to
perform well around the time of a trough in lead indicators.
Within these sectors, UBS analysts' preferred picks include
a couple of Friday's small group of gainers, William Hill , up 0.9 percent, and WPP, up 0.1 percent and
which traded at almost 1-1/2 times its 90-day daily average.
(Editing by Simon Jessop)
Keywords: MARKETS BRITAIN STOCKS/
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