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FTSE100 finally breaks its nine day losing streak

Markets began the day in negative territory, sentiment still suppressed following yesterday’s meeting in Strasbourg from which a solution to the debt crisis looked even less likely in the near term. Moody’s downgrade of Hungary’s credit rating to junk status sent their borrowing costs soaring as the nation sought arrangements with the IMF. Whilst Hungary was the first EU member to rely on IMF bailout funds back in 2008, last year’s elected Prime Minister has rejected further assistance, instead wanting to retain independence so that it could pursue “unorthodox” deficit reduction policies. The downgrade follows a rerating made by Fitch yesterday on Portuguese debt, citing a struggling economy and rising debt levels. Italians had to pay what has been described as “astronomically high” borrowing costs in the latest bond auction this morning, a yield of 6.5% being required to borrow money over 6 months. Having lost around a percentage point at its worst this morning, the market rallied following the US open.

At a stock specific level, banking stocks were amongst the biggest gainers on the index, RBS up 4.28% at 18.74p. It snaps a multiday losing streak which has seen financials lose more than 20% since the start of November, with many attributing today’s bounce to bargain hunting.

Severn Trent was a laggard following disappointing half yearly results that came in at the bottom end of analyst’s expectations. Its shares closed down 1.7%, neighboured by mining and energy companies.

The index lost some momentum following its late surge, finishing 37 points higher at 5164; a 0.7% gain that was sufficient to end a nine day losing streak.

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