London close: Footsie drops 1.8% on Eurozone worries

12th Dec 2011 16:46

London's Footsie finished at its lowest levels of the day after Wall Street bourses opened sharply in the red. The Eurozone crisis appeared to be weighing heavily on investors' minds (as usual) following some downbeat comments from Moody's. The FTSE 100 finished 1.8% down at 5,428, some 101 points off the closing price of 5,529 on Friday.MARKETS UNDERWHELMED BY SUMMIT Markets across the globe appear to have given last week's crucial EU summit in Brussels the cold shoulder, with major benchmark indices across Europe finishing between 2% and 4% down on the day.According to Gary Jenkins from Evolution Securities, this week will be the "first real market test of the summit" as markets have had the weekend to digest the outcome and the continent should be braced for multi-sovereign downgrades from Standard & Poor's in the near-future. "High levels of debt, the rising risk of a recession and tightening credit conditions are all still with us after the summit and there was little in the way of real action to deal with any of them...So all things considered downgrades seem the most likely outcome from this starting point and I would expect them to occur early as this week," he said.Speaking at a business conference in Tel Aviv ratings agency S&P's European chief economist Jean-Michel Six described last week's agreement by the European Union as "significant." However, he added: "let's not raise expectations too high, there will be more summits (...) time is running out and action is needed on both sides of the equation, on the fiscal and monetary side." Meanwhile, in its latest weekly credit ratings agency Moody's stated, "as we announced in November, unless credit market conditions stabilise in the near future, our ratings of all EU sovereigns will need to be revisited." BANKS PLUMMET, ESSAR ENERGY FOLLOWS SUITBanks were also on the decline today, with Royal Bank of Scotland (RBS) in focus after the long-awaited report from the Financial Services Authority (FSA) on the near-collapse of the bank which necessitated a government rescue. The FSA highlighted seven factors that contributed to the bank's fall from grace. These included: significant weaknesses in the bank's capital position; over-reliance on risky short-term wholesale funding; concerns about about RBS's underlying asset quality; the disastrous acquisition of ABN Amro. Sector peers Lloyds, Barclays and Standard Chartered were also falling, with the latter not being helped by Investec, which cut its target price for the stock from 1,650p to 1,550p.Kazakhstan-focused miner Eurasian Natural Resources (ENRC) also dropped on reports that it is said to be examining allegations of corruption at a Kazakh iron ore subsidiary - although denied on Sunday that it was the subject of a formal investigation by Britain's Serious Fraud Office (SFO), Reuters reports. Xstrata fell after UBS cut its target on the stock from 1,550p to 1,450p, while mining peers Fresnillo, Antofagasta and Kazakhyms were also out of favour.Meanwhile, just six stocks finished in the blue on the blue chip index, with Guinness maker Diageo leading the way after launching a TV advertising campaign to promote the popular alcoholic drink. Nick Britton, senior brand manager Guinness Western Europe, said: "Guinness is synonymous with the Christmas season, whether it is enjoying a can in front of a festive film or a cold pint of draught at Christmas parties." Sector peers British American Tobacco and Imperial Tobacco were both rising high after Investec raised its target prices from 3,100p to 3,300p, and from 2,320p to 2,660p, respectively. FTSE 250 MOVERS: CSR AND MOTHERCARE JUMPWireless technology and computer chip company CSR roared higher after announcing that it will be discontinuing investment in the areas of digital television systems-on-a-chip and silicon tuners. Also on the up was baby and toddler products vendor Mothercare on the back of bid speculation. Private equity groups are said to be sniffing around the company, which is having a tough time of it in the UK, although the overseas operations seem to be doing fine.Meanwhile, Aquarius Platinum fell heavily despite making progress on its indigenisation plan. The firm signed a Deed of Trust which incorporates the Zvishavane Community Share Ownership Trust, as part of its ongoing negotiations between its indirect 50% subsidiary Mimosa and the Zimbabwean Government. BCFTSE 100 - RisersDiageo (DGE) 1,374.00p +1.03%Imperial Tobacco Group (IMT) 2,363.00p +0.51%SSE (SSE) 1,260.00p +0.40%GlaxoSmithKline (GSK) 1,428.50p +0.32%Next (NXT) 2,600.00p +0.19%British American Tobacco (BATS) 3,000.00p +0.05%FTSE 100 - FallersLloyds Banking Group (LLOY) 24.43p -8.57%Essar Energy (ESSR) 203.90p -8.52%Eurasian Natural Resources Corp. (ENRC) 634.50p -7.37%Kazakhmys (KAZ) 880.00p -6.68%Fresnillo (FRES) 1,654.00p -6.50%Royal Bank of Scotland Group (RBS) 20.56p -6.50%Aviva (AV.) 301.00p -6.32%Antofagasta (ANTO) 1,156.00p -5.86%Xstrata (XTA) 955.40p -5.55%Inmarsat (ISAT) 400.90p -5.31%FTSE 250 - RisersCSR (CSR) 183.10p +9.77%Gem Diamonds Ltd. (DI) (GEMD) 188.90p +4.77%Mothercare (MTC) 168.00p +4.61%Synergy Health (SYR) 849.50p +2.47%BH Global Ltd. USD Shares (BHGU) 11.93 +1.97%PZ Cussons (PZC) 318.30p +1.60%Premier Foods (PFD) 5.92p +0.85%Jupiter Fund Management (JUP) 221.50p +0.77%Britvic (BVIC) 311.20p +0.68%Thomas Cook Group (TCG) 15.27p +0.66%FTSE 250 - FallersDomino Printing Sciences (DNO) 436.50p -11.35%Aquarius Platinum Ltd. (AQP) 160.00p -8.57%Ferrexpo (FXPO) 266.80p -7.30%African Barrick Gold (ABG) 472.30p -7.21%International Personal Finance (IPF) 189.60p -7.10%Regus (RGU) 79.05p -6.73%New World Resources A Shares (NWR) 412.60p -6.44%JD Sports Fashion (JD.) 650.00p -6.41%Pace (PIC) 67.35p -6.20%Spirent Communications (SPT) 112.50p -6.17%