LONDON (ShareCast) - - Spanish bailout could be on the cards
- Fitch downgrades Spain to BBB
- Investors look ahead of Chinese data this weekend

Rumours about an imminent recapitalisation of Spain's banking sector and concerns over global growth were doing the rounds on Friday, yet the Footsie still managed to pare losses by the close.

According to a Financial Times article this afternoon, Spain may ask for bailout aid for its financial sector as early as tomorrow during a conference call with European finance ministers.

Fitch Ratings said last night that the "likely 'fiscal cost'" of restructuring and recapitalising the Spanish banking sector would be between €60bn and €100bn in a worst-case scenario. This came as the ratings agency downgraded its sovereign debt rating for the country from A to BBB.

Also weighing on sentiment today were yesterday's comments from Federal Reserve Chairman Ben Bernanke who "performed his usual trick of depressing the markets", according to Craig Erlam from Alpari. Analysts were hoping for hints of imminent stimulus measures but Bernanke failed to say whether the Fed would be embarking on QE3 any time soon.

"The positive sentiment from earlier in the week has been knocked over the last 24 hours. With the ECB, BOE and Fed all deciding against further QE or rate cuts this week, it’s surprising that the markets have held up as well as they have," Erlam said in an emailed note.

This afternoon, President Barack Obama said that the ongoing crisis in Europe could have a "potential impact" on the US economy as he urged Eurozone leaders to act: “The sooner they act the more decisive and concrete their action, the sooner people and markets will regain some confidence."

Investors will still be digesting the recent interest rate cut from China, which initially spurred impressive gains for equity markets on Thursday. However, ahead of some key inflation and industrial production figures due out this weekend from the world's second-largest economy, some analysts are questioning whether the rate cut was a pre-emptive move ahead of what could be some disappointing data.

FTSE 100: Miners down, defensives up

Vedanta, Kazakhmys, Antofagasta, Xstrata, Rio Tinto, Glencore and ENRC were among the worst performers of the day as investors fled from risk.

BHP Billiton was also among the fallers after Bank of America Merrill-Lynch reduced its profit forecasts for the group on the back of lower oil prices estimates. Kazakhmys announced late on that it has signed an agreement with JSC RusHydro, one of Russia's largest power generating companies, to consider establishing a hydro-electric power joint venture.

The defensive utilities sector benefited from its 'safe-haven' appeal today with Severn Trent, Centrica, United Utilities, SSE and National Grid making gains. Credit Suisse raised its target price for National Grid today after saying that Ofgem's new RIIO regulation presents a £2.5bn opportunity for the group.

Capita was a strong performer after JP Morgan Cazenove reiterated its overweight rating on the outsourcing giant.

Pharmaceuticals leviathan GlaxoSmithkline was also in demand after extending the offer period for its hostile take-over of US sector peer Human Genome Sciences (HGS) by a further three weeks.

FTSE 250: Bumi leaps on mining contract

Mining firm Bumi leapt into the top spot on the second-tier index after reportedly signing a contract to sell 50m metric tons of coal. According to Dow Jones Newswires, the coal will be sold at an average price of $80 per ton this calendar year. The firm's Resource Director, Dileep Srivastava, was quoted as saying: "The sales contract is 67% of our 75-million-ton output guidance for 2012."

Heading the other way was energy markets-focused engineer Lamprell which was battered after sneaking out a profit warning on Thursday after the London market closed, saying that it now expects to make a half-year loss of between $15m and $20m, compared with earlier guidance of "a small loss". The group also said that Chairman Jonathan Silver would step down.

"We continue to believe that management’s credibility has fundamentally deteriorated," Nomura said in a research note this morning.


FTSE 100 - Risers
Capita (CPI) 649.50p +2.85%
Severn Trent (SVT) 1,782.00p +2.71%
Centrica (CNA) 315.20p +2.20%
British Sky Broadcasting Group (BSY) 696.00p +2.20%
Standard Life (SL.) 220.40p +1.90%
United Utilities Group (UU.) 680.50p +1.80%
Vodafone Group (VOD) 171.50p +1.51%
Shire Plc (SHP) 1,879.00p +1.51%
Kingfisher (KGF) 279.00p +1.31%
Reed Elsevier (REL) 493.40p +1.31%

FTSE 100 - Fallers
Vedanta Resources (VED) 935.50p -5.07%
Rio Tinto (RIO) 2,869.00p -4.84%
Eurasian Natural Resources Corp. (ENRC) 423.80p -3.94%
Evraz (EVR) 279.20p -3.19%
Kazakhmys (KAZ) 705.00p -3.16%
BHP Billiton (BLT) 1,767.00p -2.91%
Anglo American (AAL) 2,074.00p -2.77%
Petrofac Ltd. (PFC) 1,535.00p -2.66%
Schroders (Non-Voting) (SDRC) 976.00p -2.59%
Antofagasta (ANTO) 1,060.00p -2.21%

FTSE 250 - Risers
Bumi (BUMI) 365.00p +11.93%
Atkins (WS) (ATK) 694.50p +6.27%
New World Resources A Shares (NWR) 326.10p +4.19%
Bellway (BWY) 770.50p +3.56%
Ophir Energy (OPHR) 615.00p +3.36%
Grainger (GRI) 90.00p +2.97%
Synergy Health (SYR) 887.00p +2.60%
RPS Group (RPS) 202.00p +2.54%
Bovis Homes Group (BVS) 432.30p +2.32%
Brown (N.) Group (BWNG) 233.60p +1.96%

FTSE 250 - Fallers
Lamprell (LAM) 84.50p -22.26%
Kesa Electricals (KESA) 49.81p -7.93%
Afren (AFR) 108.40p -7.51%
Lonmin (LMI) 747.50p -5.62%
Essar Energy (ESSR) 117.40p -5.55%
Anglo Pacific Group (APF) 238.80p -5.50%
Ocado Group (OCDO) 94.90p -5.10%
Imagination Technologies Group (IMG) 487.80p -4.17%
Avocet Mining (AVM) 157.00p -3.98%
Hays (HAS) 72.25p -3.73%

BC

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