Newspaper article The Evening Standard (London, England)

Footsie Joins Global Slump on US Rate Rise Concerns

Newspaper article The Evening Standard (London, England)

Footsie Joins Global Slump on US Rate Rise Concerns

Article excerpt


IT WAS another day of misery for City investors as share prices around the world fell sharply.

The catalyst for the latest sell-off is the US economy where interest rates look set to rise again.

Economic growth remains on track, but the $300 billion ([pounds sterling]170 billion-plus cost of rebuilding New Orleans and soaring oil prices have forced the US Federal Reserve to switch its attention to growing inflationary pressures.

Wall Street traders say it is not a case of if rates are raised, but when.

Overnight, on Wall Street, the Dow tumbled 124 points - its third consecutive day of losses. That set alarm bells ringing in the Far East this morning where heavy selling left the Hang Seng sharply lower in Hong Kong and the Nikkei 225 in Tokyo.

Back in London, the FTSE 100 index fell 64.8 to 5363.3, stretching its two-day deficit to 131.4 points.

At midday, just five blue-chips were showing gains while one was unchanged. The decision of the Bank of England's monetary policy committee to peg UK interest rates came as no real surprise.

Mining shares looked particularly vulnerable having enjoyed a strong run this year on the back of demand by China for raw materials which has seen price for metals such as copper reaching record highs.

The worst falls were seen in BHP Billiton, down 291/2p at 8281/2p, Antofagasta, 35p to 1437p, and Rio Tinto 55p to 2159p.

Oil companies were also targeted by sellers for a second day, with Paladin Resources down 15p at 2831/2p, Dana Petroleum off 371/2p to 8151/2p, Tullow Oil 113/4p lighter at 232p and Burren Energy off 331/2p to 7791/2p.

One of the few bright spots was shares of the London Stock Exchange, up 10p at 580p, on reports Australian investment bank Macquarie has linked up with another Aussie company Computershare, and would make its long-awaited offer within days.

The LSE is still awaiting the outcome of a Competition Commission inquiry into last year's bids by Deutsche Borse and Euronext.

DB's offer was worth around 520p a share, but sources in the Square Mile say the LSE is unlikely to accept anything less than 620p. …

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