London stocks fall more than 1% as banking crisis fears linger

By Shashwat Chauhan and Johann M Cherian

(Reuters) -London stocks fell more than 1% on Friday, with financials stocks extending declines at the end of yet another turbulent week for markets as concerns regarding the condition of the global financial system lingered.

Global sentiment was fragile after shares of German behemoth Deutsche Bank took a beating as its credit default swaps, which reflect the cost of insuring debt against default, shot to a four-year high. [MKTS/GLOB]

The blue-chip FTSE 100 fell 1.3% as banks lost 3.1%, pushing the lenders into the red for the year.

“It’s yet another banking losses kind of story. The thing we thought was put to bed earlier in the week has come back to haunt us,” said Chris Beauchamp, chief market analyst at IG Group. “The moves have translated into UK banks and have wiped out all the gains we’ve made since October.”

Banks had gained nearly 41% between mid-October and early March and have lost nearly 19% since then.

Energy majors Shell and BP also fell 3.1% and 2.5%, respectively as oil prices extended losses. [O/R]

Despite Friday’s losses, the FTSE 100 was up nearly 1% for the week, its best weekly performance in five, helped by a brief mid-week relief rally in banking stocks and miners.

The domestically focussed FTSE 250 midcap index fell 1.3%.

Meanwhile, a preliminary reading of the S&P Global UK Composite Purchasing Mangers’ Index (PMI) came in at 52.2 in March, down from 53.1 in February. Economists had forecast a reading of 52.8.

Separately, data showed British retail sales rebounded by 1.2% in February versus expectations of a rise of 0.2%.

J D Wetherspoon rose 13.6% to an eight-month high as Britons’ taste for cocktails, Welsh vodka and real ale helped the pubs group swing to profit in the first half of its financial year.

(Reporting by Shashwat Chauhan and Johann M Cherian in Bengaluru; Editing by Subhranshu Sahu, Savio D’Souza and Alex Richardson)