London close: Footsie dampened by European debt fears

12th Jul 2011 16:31

The ongoing euro crisis weighed heavily on stock markets in Europe and the UK as investors continued to fret over sovereign debt contagion spreading to Italy, Europe's third largest economy.However, after a steep decline early on, things calmed down slightly after it was announced that Italy sold €6.75bn of treasury bills in the first auction since the country's sovereign debt yields started heading at pace to "bailout" levels. The debt offering was 1.55 times subscribed, down from 1.71 at the June auction, but good enough to mollify nervous investors. The average interest rate on the debt was up 1.5 percentage points from the June auction. Although stocks came off their lows in London, the blue chip index still finished over 1% lower, well below the 5,900 mark.Chip maker ARM was the biggest faller after figures from US peers Microchip Technology and Novellus came short of expectations. BSkyB was continuing its decline, a day after Rupert Murdoch withdrew his offer to spin-off Sky News in order to make his bid for the satellite broadcaster feasible. As such, BSkyB said the takeover panel had notified the company that it was no longer in a formal offer period as the News Corp bid has been referred to the Competition Commission for further review. Meanwhile, the mid-cap stock index was rocked by Thomas Cook's profit warning. The travel operator lost more than a quarter of its market value after saying that its third quarter results will fall below expectations hurt by the unrest in the Arab countries and weak domestic demand. It was the worst performer on the FTSE 250. Shares of international leisure travel company TUI Travel followed on the heels of Thomas Cook, falling approximately 8%. Back on the FTSE 100, plumber's merchant Wolseley was firmly in the red after agreeing to sell its electric centre business unit to electrical products distributor Edmundson Electrical for an undisclosed amount and said the transaction is expected to generate a small gain. Luxury brand Burberry and high street retailer Marks & Spencer were among the high risers ahead of their first quarter reports due on Wednesday. Burberry is to release an interim management statement, while M&S is due to reveal its quarterly results. Retailing peers Next and Kingfisher were also in demand as the British Retail Consortium's (BRC) Retail Sales Monitor for June came in ahead of estimates. Total sales were up by 1.5% during June, having fallen by 2.1% in May. FTSE 250-peers Kesa Electricals and Dixons Retail were also wanted. Both Cairn Energy and Vedanta Resources fell into the red as the companies announced that the latter's takeover of Cairn India has progressed. Mining giant Vedanta has completed the first tranche of its purchase of Cairn Energy's Indian subsidiary, after acquiring an additional 10% stake for net proceeds of $1.36bn in cash, raising its stake to 28.5%.BCFTSE 100 - RisersBurberry Group (BRBY) 1,437.00p +1.63%Marks & Spencer Group (MKS) 373.00p +1.17%Glencore International (GLEN) 495.85p +1.09%Next (NXT) 2,410.00p +0.92%Royal Bank of Scotland Group (RBS) 35.99p +0.76%Hammerson (HMSO) 459.90p +0.66%Essar Energy (ESSR) 378.50p +0.58%GlaxoSmithKline (GSK) 1,365.00p +0.55%British Land Co (BLND) 590.50p +0.51%Serco Group (SRP) 554.50p +0.45%FTSE 100 - FallersARM Holdings (ARM) 596.50p -4.94%Wolseley (WOS) 1,908.00p -3.34%British Sky Broadcasting Group (BSY) 692.00p -3.28%Severn Trent (SVT) 1,443.00p -2.76%Barclays (BARC) 227.65p -2.69%Lonmin (LMI) 1,355.00p -2.45%ITV (ITV) 68.00p -2.37%International Consolidated Airlines Group SA (IAG) 231.70p -2.32%Lloyds Banking Group (LLOY) 43.87p -2.19%Man Group (EMG) 246.40p -2.18%