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“Markets Slip on Further Banking Fears ? Latest Market Analysis”

Shares in Italian banks also fell sharply as expectations on more failures were likely. The falls came ahead of much anticipated official results that are to be released by the European Banking Authority on Friday, and add to a deteriorating picture of the financial health of the European core. Shares in France and Germany reacted weakly to the news, with their CAC40 and DAX indices initially down 2.9% and 3% respectively.

As seen in previous sessions, the FTSE 100 performed slightly better with initial losses in the region of 2.25%. In addition to lower European exposure, inflation data for the UK came in ahead of expectations and showed a surprise fall in June with CPI dropping from 4.5% to 4.2%. Additionally, core inflation statistics i.e. those excluding volatile food and fuel costs, fell from 3.3% to 2.8% representing their lowest level since December. Despite being welcome news for the UK economy, Sterling fell by 0.25% against the dollar as the improved inflationary environment decreased the likelihood of a shorter term interest rate rises.

After a scary start to the day, which saw more tightening of German and US bond yields and further increases in those of Italy and Spain, markets settled and gradually recovered some ground as the day wore on. The FTSE managed to recover somewhat and finished down by 1% at 5869 points, with similar improvements evident across the major European bourses.

Leading the UK’s decliners, were shares in computer chip manufacturer ARM Holdings, which slumped 5% to 596.5p, in sympathy to poor overnight results from US peer Novellus.

This was posted in Bdaily's Members' News section by John Dance .