LONDON – Britain’s top share index fell by midday yesterday as a further slide in embattled Northern Rock pulled other mortgage lenders lower, but M&A news boosted Sainsbury and Friends Provident.
At 1020 GMT, the FTSE 100 was down 53,1 points, or 0,82 per cent at 6 406,9, after gaining 2,8 per cent on Wednesday following an interest rate cut from the US Federal Reserve. “We had a good day yesterday.We get profit taking.People want to get out after having seen a good rally.There is still too much uncertainty in the equity market,” said Peter Dixon, UK economist at Commerzbank.”Obviously, Northern Rock remains the big weight hanging over the market.We are still waiting on the news of its future.Until they decide what they are going to do, it will continue to weigh on the financial sector.”Mortgage lender Northern Rock, Britain’s biggest casualty of the global credit squeeze, plunged nearly 19 per cent to 210 pence after hitting a low of 176 pence.The stock has lost more than 65 per cent in the week since it was forced to ask the Bank of England for an emergency funding line.”If it’s sold, it is going to be cheap, and that’s the problem.All the potential predators know that it is thrashed and has no future as an ongoing business because the brand is tarnished,” David Buik of Cantor Index said.Britain’s Treasury said guarantee arrangements for deposits in Northern Rock would cover all accounts existing at midnight on Wednesday, and any reopened accounts.Fellow mortgage lenders Alliance & Leicester lost eight per cent, Bradford & Bingley dropped 8,8 per cent and HBOS, which said rumours of funding problems were “complete and utter nonsense”, shed 4,7 per cent.Barclays, Royal Bank of Scotland, HSBC, Standard Chartered and Lloyds TSB also fell.In Europe, Deutsche Bank said the liquidity crisis that sent shockwaves through the international financial system would hurt third-quarter profit at the bank.Later in the session, investors are expected to pore over results from Bear Stearns and Goldman Sachs for clues on the extent of the damage from the credit turmoil sparked by a crisis in the US housing and mortgage markets.Market players will also keep an eye on testimony from Fed Chairman Ben Bernanke later in the day.Nampa-Reuters”We had a good day yesterday.We get profit taking.People want to get out after having seen a good rally.There is still too much uncertainty in the equity market,” said Peter Dixon, UK economist at Commerzbank.”Obviously, Northern Rock remains the big weight hanging over the market.We are still waiting on the news of its future.Until they decide what they are going to do, it will continue to weigh on the financial sector.”Mortgage lender Northern Rock, Britain’s biggest casualty of the global credit squeeze, plunged nearly 19 per cent to 210 pence after hitting a low of 176 pence.The stock has lost more than 65 per cent in the week since it was forced to ask the Bank of England for an emergency funding line.”If it’s sold, it is going to be cheap, and that’s the problem.All the potential predators know that it is thrashed and has no future as an ongoing business because the brand is tarnished,” David Buik of Cantor Index said.Britain’s Treasury said guarantee arrangements for deposits in Northern Rock would cover all accounts existing at midnight on Wednesday, and any reopened accounts.Fellow mortgage lenders Alliance & Leicester lost eight per cent, Bradford & Bingley dropped 8,8 per cent and HBOS, which said rumours of funding problems were “complete and utter nonsense”, shed 4,7 per cent.Barclays, Royal Bank of Scotland, HSBC, Standard Chartered and Lloyds TSB also fell.In Europe, Deutsche Bank said the liquidity crisis that sent shockwaves through the international financial system would hurt third-quarter profit at the bank.Later in the session, investors are expected to pore over results from Bear Stearns and Goldman Sachs for clues on the extent of the damage from the credit turmoil sparked by a crisis in the US housing and mortgage markets.Market players will also keep an eye on testimony from Fed Chairman Ben Bernanke later in the day.Nampa-Reuters
