Banks, commods fall; FTSE hits near nine-month low

* FTSE down 2.5 percent; Europe debt, Korean tensions weigh

* Banks down as euro zone debt hits sector sentiment

* Commodities fall; Korea tension adds uncertainty

By David Brett

LONDON, May 25 (BestGrowthStock) – Britain’s top shares fell heavily
early on Tuesday, as anxiety mounted on the fiscal state of the
euro zone and growth concerns knocked commodities and banks.

By 0756 GMT, the FTSE 100 (.FTSE: ) was down 124.05 points, or
2.5 percent at 4,945.56, having fallen to an eight-and-a-half
month low in opening deals.

Sentiment in Britain echoed that on Wall Street overnight as
anxiety about Europe’s response to the Greek debt crisis,
concern about swelling debt in other euro zone economies and the
bailout by Spain’s central bank of bank CajaSur on Saturday,
combined to slam confidence.
UK banks fell across the board as jittery investors worried
that the problem in Europe may be deeper than first feared.

Royal Bank of Scotland (RBS.L: ), Barclays (BARC.L: ) and Royal
Bank of Scotland (RBS.L: ) fell 4.2-4.5 percent.

Euro zone debt contagion weighed on Asian markets which were
also hit by worsening tensions between North and South Korea.

North Korean leader Kim Jong-il has ordered his military to
be on a combat footing, contributing to a 3.6 percent slide for
Asian stocks outside Japan (.MIAPJ0000PUS: ). [ID:nSEW002195]

“The big game-changer overnight has been the geopolitical
tensions in Korea, which has taken the wind out of the sails and
added to this toxic cocktail,” Richard Hunter, head of equities
at Hargreaves Lansdown said.

Hunter added that the problems in Korea combined with
Europe’s debt crisis could begin to impact demand and growth
from Asia and India, initially seen as immune to Europe’s
issues.

COMMODITIES FALLING

Miners retreated in tandem with metal price as the outlook
for demand clouded over.

ENRC (ENRC.L: ), Rio Tinto (RIO.L: ), Xstrata (XTA.L: ) and Lonmin
were down 3.2-5.1 percent.

Crude (CLc1: ) also fell, down 2.3 percent, with oil majors BP
(BP.L: ), BG Group (BG.L: ) and Royal Dutch Shell (RDSa.L: ) off
2.1-3.3 percent.

BP is exploring a new way to siphon off oil gushing into the
Gulf of Mexico if current plans to plug the leak this week fail.
[ID:nLDE64O04Q]

The FTSE is down more than 15 percent since fears escalated
about the euro zone sovereign debt crisis in mid-April. It is
down 8.7 percent this year after a 22 percent gain in 2009.

Prudential (PRU.L: ) dropped 3.7 percent after its shares fell
on their Asia debut on Tuesday, hit by the global sell-off and
concerns over shareholder support for the British insurer’s
planned purchase of AIA, the industry’s biggest acquisition.

Marks & Spencer (MKS.L: ), Britain’s biggest clothing
retailer, was down 2.5 percent after it said it was cautious
about the outlook for consumers ahead of expected tax rises as
it met forecasts with a 4.6 percent rise in annual profit.

UK GDP grew slightly faster than initially estimated in the
first three months of this year after a strong rebound in
industrial production and business services, official data
showed.

The Office for National Statistics said Britain’s economy
grew by 0.3 percent in the first quarter, up from an initial
estimate of 0.2 percent, though slower than the 0.4 percent in
the fourth quarter of 2009. Analysts polled by Reuters forecast
a median rise of 0.3 percent for the quarter. [ID:nAHLOGE625]

^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Latest wrapup on the euro zone debt crisis: [ID:nLDE64N05B]
Graphic on the euro zone debt: http://link.reuters.com/fyw72j
For related news stories: [ID:nLDE64I0RB]
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^

Investment Tools

(Editing by Mike Nesbit)

Banks, commods fall; FTSE hits near nine-month low