FTSE slides 2.2 pct, economy fears reignited

By Simon Falush

LONDON (BestGrowthStock) – Worries about the global economy pushed Britain’s top share index to its lowest close in three months on Thursday as spiking risk aversion hammered banks and miners while energy stocks fell on weaker commodity prices.

The FTSE 100 (.FTSE: ) ended 113.84 points or 2.2 percent lower at 5,139.31, its lowest close since November 5, having snapped a three-session winning streak on Wednesday, shedding 0.6 percent.

Banks were the biggest drag on the index. Heavyweight HSBC (HSBA.L: ), Royal Bank of Scotland (RBS.L: ), Barclays (BARC.L: ) and Lloyds Banking Group (LLOY.L: ) were 3.7 to 7.8 percent lower.

A widely predicted decision by the Bank of England to keep rates flat at 0.5 percent and not to extend the 200 billion pound ($317.5 billion) quantitative easing program did nothing to improve market sentiment.

The European Central Bank also kept rates on hold at a record low of 1 percent, as expected, but lingering worries about peripheral euro zone economies also helped depress equities.

An already negative market fell further after new applications for jobless insurance in the U.S. rose unexpectedly, helping the dollar gain as us investors repatriated money which put pressure on commodity prices.

“There is a renewed bout of risk aversion, there were expectations that the number would trend lower,” said Tim Rees, fund manager at Insight Investment referring to the U.S. data.

“Although some company results were pretty good, the market is finding reasons to be bearish,” he said.

Vodafone (VOD.L: ) was the pick of among just five stocks in positive ground, up 3.6 percent after the mobile phone operator raise its outlook and posted third-quarter revenue ahead of forecasts.

Software company Autonomy (AUTN.L: ) was another strong gainer, up 2.7 percent after it said it was confident about 2010 when posting rises in fourth-quarter earnings that met forecasts.

Drugmaker GlaxoSmithKline (GSK.L: ) turned positive, after posting its fourth-quarter results which topped forecasts. It ended 0.7 percent higher.

GRIM MOOD

But the overall mood of the market was deeply negative as heavyweight commodity stocks fell sharply as metal and crude prices slid with investors reappraising the demand outlook.

Miners dropped as metal prices were knocked again as the dollar strengthened. Antofagasta (ANTO.L: ), Lonmin (LMI.L: ), Rio Tinto (RIO.L: ), Xstrata (XTA.L: ) and BHP Billiton (BLT.L: ) fell 4 to 6 percent.

Royal Dutch Shell (RDSa.L: ) fell 2.1 percent after it posted a 75 percent fall in fourth-quarter profit (Read more your timing to make a profit.) to $1.18 billion.

BP (BP.L: ) fell 1.6 percent and explorer Tullow Oil (TLW.L: ) lost 1.9 percent.

Consumer goods group Unilever (ULVR.L: ) fell 3.5 percent after it warned of increasing competition from its rivals trying to attract cash-strapped shoppers, overshadowing a forecast-beating rise in quarterly underlying sales.

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(Editing by Jon Loades-Carter)

FTSE slides 2.2 pct, economy fears reignited