FTSE close: Dubai crisis unnerves traders
London shares took a hammering today after nerves over Dubai's financial security prompted a sell-off interrupted only by a technical glitch.
Technical difficulties at the London Stock Exchange meant trading was suspended mid-morning with the FTSE 100 at 5,264.9. Shares continued to fall when trading resumed at 14.30, with the index closing 170.7 points on down at 5,194.13.
Traders were unnerved after it emerged that two of Dubai's flagship firms planned to delay repayment on billions of dollars of debt as a first step toward restructuring Dubai World, the conglomerate that spearheaded the emirate's breakneck growth.
'The Dubai debt debacle and the uncertainty that it has created as a result of the Kingdom's forthcoming holiday has had a severe knock-on effect on equity markets, as well as throwing the bond market into turmoil,' said David Buik, senior partner at BGC Partners.
US markets are closed today for the Thanksgiving holiday.
Banks took the most points off the index, and RBS was worst hit with a 2.77p drop to 33p, and HSBC retreated 35.6p to 705.6p. Lloyds Banking Group was 5.42p off at 88.83p and Barclays fell 25.2p to 291.1p.
Property shares also fell on the Dubai worries: Britain's recovering commercial real estate market could be scuppered if the Dubai government was forced to hold a firesale of its international real estate.
'The tangible impact is a potential reduction in capital flows into the UK commercial real estate market from Middle Eastern states which are less resource rich than others,' Nomura analyst Mike Prew said.
Land Securities, the UK's largest listed property firm, was 26.5p down at 660.5p, while British Land was 17.5p down at 450p.
And the London Stock Exchange, in which Borse Dubai has a large stake, was a top faller, with a 60p drop to 754.5p.
Among the miners Kazakhmys and Rio Tinto lost 83p to 1213p and 151.5p to 2994.5p as the sector littered the fallers' board.
BHP Billiton dismissed talk on Thursday that rival Rio Tinto was baulking at a proposed $116bn joint venture in iron ore, insisting the two were close to a binding agreement. BHP was off 80.5p to 1,834.5p.
Antofagasta was 45.5p lighter at 890.5p as third-quarter figures revealed a slump in underlying earnings as revenues and copper prices suffered.
The leading Footsie faller was Legal & General, down 6.25p to 78.5p or 7.37% after Citigroup slashed its rating on the firm to sell.
Water companies bucked the wider market as they greeted regulator Ofwat's decision to impose a price cut of only £3 over five years to the average UK water bill. Ofwat had threatened a more severe restriction.
At the top of the Footsie, Severn Trent was 38p up at 1,044p and United Utilities was 1.7p ahead at 485.8p, the latter rebounding after a decline on Wednesday in the wake of its first-half results. In the mid-caps, Pennon was 5.2p up at 492.1p and Northumbrian was 7.2p up at 263.1p.
In the second tier, Currys owner DSG International was 0.43p better at 37p or 1.18% after recent improved trading.
But All Bar One pubs and restaurants group Mitchells & Butlers was 3.5p off at 253.4p as it cautioned over second half prospects despite signs of a 'small upturn' in consumer confidence.
Elsewhere on the high street, Clinton Cards edged 0.75p lower to 46p despite an update showing recent sales improvements due to help from the Halloween holiday.
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