FTSE ends lower, but recovers from heavy losses

By Simon Falush

LONDON (BestGrowthStock) – Britain’s top share index fell for a third straight day on Friday, and briefly dipped below 5,000 in volatile trade as euro zone sovereign debt concerns plagued sentiment, but the market recovered ground in late trade.

Swinging violently, the FTSE 100 (.FTSE: ) fell as much as 116 points, to fall below 5,000 for the first time since November before reclaiming ground in afternoon trade to close 10.20 points or 0.2 percent lower at 5,062.93.

The index has lost more than 13 percent since fears escalated about the euro zone sovereign debt crisis in mid-April and is down 6.5 percent so far this year after a 22 percent gain in 2009.

Energy stocks slipped back as investors fretted on the demand outlook for crude.

BG Group (BG.L: ) and Royal Dutch Shell (RDSa.L: ) slipped 1.2 percent and 1.1 percent respectively.

BP (BP.L: ) lost 4.2 percent as it fended off accusations that it had not fully disclosed the size of a month-old seabed leak billowing brown crude oil into the Gulf of Mexico in a spreading environmental disaster.

It has fallen 17 percent this quarter.

FEBRILE ATMOSPHERE

German lawmakers backed a $1 trillion safety net to stabilize the euro zone’s financial markets which have been sent into turmoil by escalating fears on sovereign debt.

But investors took little notice of government measures and moves were driven on sentiment which ebbed and flowed on vague and unsubstantiated rumors.

“It’s what we should expect from now on. In this febrile atmosphere, it will be extremely volatile, it will go from one extreme to another,” said David Morrison, market strategist at GFT Global.

“At times it feels like we’re going to fall off the edge of a cliff, and I understand this view, there’s a lot to be worried about.

Banks recovered from sharp losses, mirroring strength from their U.S. peers after the U.S. Senate approved a sweeping Wall Street reform bill, capping months of wrangling over the biggest overhaul of financial regulation since the 1930s.

Royal Bank of Scotland (RBS.L: ), Standard Chartered (STAN.L: ) Lloyds Banking Group (LLOY.L: ) and Barclays (BARC.L: ) added 1 to 3.8 percent. But HSBC (HSBA.L: ) and Standard Chartered stayed in negative territory.

European finance ministers were to meet later on Friday to discuss changes to budget rules to prevent another Greek-style debt crisis.

The inability of euro zone leaders to agree on policy has heightened investors’ nerves this week, contributing to a 3.8 percent fall in the index since Monday.

The mining sector was the main positive for the index, lifted by stronger metal prices and also given a boost by a positive note from HSBC.

The broker reiterated its “overweight” position on Rio Tinto (RIO.L: ) and Anglo American (AA.L: ) which added 2.6 and 3.5 percent respectively.

Xstrata (XTA.L: ) rose 6.4 percent after HSBC upgraded it to “neutral” from “underweight.”

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(Editing by Sharon Lindores)

FTSE ends lower, but recovers from heavy losses