LONDON MARKETS: FTSE 100 Pulled Down As Turkey Contagion Concerns Grow
August 10 2018 - 5:22AM
Dow Jones News
By Carla Mozee, MarketWatch
Sports Direct to buy House of Fraser
U.K. stocks traded solidly lower on Friday, dragged down
alongside the broader European equity market, on mounting concerns
that Turkey's currency crisis will hurt eurozone banks, but
London's blue-chips market is on course to edge higher for the
week.
U.K. stocks were little changed after a reading of British
economic growth came in line with expectations.
How markets are moving
The FTSE 100 fell 0.8% to 7,682.47. On Thursday, the index lost
0.5%
(http://www.marketwatch.com/story/ftse-100-driven-lower-by-plunge-in-shares-of-tui-ag-2018-08-09),
ending a four-session winning streak. But for the week, the
benchmark was clinging to a modest gain of 0.3%.
The pound fell to $1.2782 from $1.2824 late Thursday in New
York.
What's driving markets
Equities across the region stumbled following a Financial Times
report
(https://www.ft.com/content/51311230-9be7-11e8-9702-5946bae86e6d)
that the European Central Bank is growing more concerned about
exposure of European banks to Turkey's woes. The Turkish lira was
sent plunging to its lowest in a year against the U.S. dollar on
Friday.
The lira's slide comes on questions about the central bank's
independence in the face of growing power held by President Recep
Tayyip Erdogan, as well as a political rift between Turkey and the
U.S.
The euro also dropped against the dollar "as investors feared
European banks exposure to the lira. The common currency broke
below the key 1.1500 support mark for the first time in more than a
year. The fears also rippled to [the pound-dollar pair] which took
out the 1.2750 barrier in early London dealing," said Boris
Schlossberg, managing director of FX strategy at BK Asset
Management.
Read:Dollar index jumps to around one-year high as Turkey's lira
gets rocked
(http://www.marketwatch.com/story/dollar-index-jumps-to-around-one-year-high-as-turkeys-lira-gets-rocked-2018-08-10)
Spain's BBVA SA (BBVA.MC) (BBVA.MC), Italy's UniCredit SpA
(UCG.MI) and France's BNP Paribas SA (BNP.FR) are among the biggest
lenders to Turkey and have come under closer scrutiny by the Single
Supervisory Mechanism, the ECB's arm charged with monitoring the
region's banks, according to the FT report.
Meanwhile, retail stocks were mostly lower as upscale apparel
and accessories retailer House of Fraser went into administration
after a collapse in talks between the company and its creditors.
But Sports Direct International PLC (SPD.LN) has purchased the
struggling chain for GBP90 billion, expanding a stake already held
in House of Fraser by Sports Direct's owner, Mike Ashley.
Stocks in focus
Among banking stocks, Barclays PLC (BCS) gave up 1.1%, Standard
Chartered PLC (STAN.LN) lost 0.9% and HSBC Holdings PLC (HSBA.LN)
(HSBA.LN) fell 0.5%. Royal Bank of Scotland Group PLC (RBS.LN) was
off 0.6%. RBS was upgraded to a buy rating from neutral on Friday
at UBS, which said in part that RBS's stock hasn't tracked positive
per-share earnings revisions.
Among retailers, apparel seller Next PLC (NXT.LN) fell 1.2% and
department store operator Marks & Spencer Group PLC (MKS.LN)
gave up 0.9% but Debenhams PLC(DEB.LN) rose 2.2% off the FTSE 100
as Mike Ashley holds a stake in that department store.
Ryanair Holdings PLC shares (RYAAY) fell 2.6% as the airline
said it plans to operate 85% of its schedule Friday as pilots in
five European countries take strike action
(http://www.marketwatch.com/story/ryanair-will-operate-85-of-flights-over-strike-2018-08-10).
That is the fifth strike action since July 12.
Diageo PLC (DEO) was off by 0.2%, even after the maker of
Gordon's Gin and Smirnoff vodka said it would start buying back up
to 1.4 billion pounds ($1.79 billion) of its shares
(http://www.marketwatch.com/story/diageo-to-start-buying-back-gbp14-bln-of-shares-2018-08-10-44852717)
until Jan. 31.
Economic data
The U.K. economy expanded
(http://www.marketwatch.com/story/uk-growth-outpaced-eurozones-in-second-quarter-2018-08-10)
at a rate of 0.4% in the three months to June, bolstered by
construction and services activity, a faster rate than 0.2% in the
first quarter of 2018. The economy expanded at an annualized rate
of 1.5% in the second quarter, the Office for National Statistics
said Friday, faster than the 0.9% rate in the first quarter.
(END) Dow Jones Newswires
August 10, 2018 06:07 ET (10:07 GMT)
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