Britain's FTSE heads for worst month since August

LONDON: British equity markets fell on Wednesday, snapping a
four-day winning streak and heading for their worst monthly showing
since last summer on concerns about the euro zone crisis and dampened
expectations of growth-boosting measures from China.
With a
light UK calendar, the spotlight was firmly on the European
Commission's economic strategy for the euro zone, which is set to spell
out measures to balance growth with unpopular fiscal consolidation that
will be particularly pointed for Spain and Italy.
Concerns about Spain's ability to recapitalise its banks were reignited by signals from the European Central Bank that it is not prepared to step in.
In
a further blow to investor sentiment, expectations of new
growth-boosting measures from China took a knock when influential
Chinese academics said Beijing should not launch a new round of
aggressive fiscal stimulus. Such expectations had been a key driver of
market gains in recent sessions, as British companies look to China to
support sales and help counterbalance slumping demand from the euro
zone.
The benchmark FTSE 100 fell 62.25 points, or 1.2 percent,
by 0740 GMT, to 5,327.33, reversing the previous session's gains and
heading for for its worst month since August.
"It's centred around worries about Spain, coupled with China saying that there are no plans for any major stimulus," said Zeg Choudhry, head of equities trading at Northland Capital Partners.
"Everything
is intertwined - UK's biggest exposure in banks is to France, but
France's exposure to Greece and Spain is huge, so it's a domino effect
... It's all about people looking to keep their losses down."
New
proof of UK's exposure to the euro zone crisis came from mid-cap
Sportingbet, with tough markets in Spain and Greece contributing to a
33 percent slump in underlying quarterly profit for the online gaming
firm.
The UK banking sector fell 0.9 percent. Bigger losses,
however, came from sectors which look to China for demand growth with
heavyweight miners down 1.8 percent .
Companies going
ex-dividend including National Grid and Marks & Spencer,
contributed around 5 points to the FTSE 100's fall and accounted for
some of the top single stock fallers.
From a technicals
viewpoint, the 10-day moving average - which has served as a floor for
the past two sessions - gave way around the 5,335 mark, potentially
opening the door for further weakness.
"We expect high
volatility and nervous trading conditions to persist for the
short-term," Jack Pollard, analyst at Sucden Financial, said in a note.
- Reuters