Newspaper article The Evening Standard (London, England)

Footsie and Dow Driven Down by Losses at GM

Newspaper article The Evening Standard (London, England)

Footsie and Dow Driven Down by Losses at GM

Article excerpt


OUCH! Wall Street fell with a bump tonight, dragging down the FTSE 100,as investors digested General Motors' painful losses.

Despite strong productivity numbers in America, worries about the dismal dollarand the oh-so-dear oil price sent investors scurrying away from equities onboth sides of the Atlantic. The Footsie slipped 49.3 points to 6425.6 while theDow lost 104.2 points to 13,556.7.

Shares in nuclear power generator British Energy, which have lost a third oftheir value since peaking at 750p last year, were on the slide again today.They fell 371/2p, remaining the worst blue-chip performer all day after thecompany confessed it was still too early to say when it would be able torestart four nuclear reactors it shut down last month.

British Energy admitted it had found corrosion on wire windings at its Heyshamand Hartlepool plants. This resulted in the closure of the reactors for anundetermined period to inspect the wire windings, related to boiler-closureunits. The company says more time is needed for inspections before it comes upwith a timetable to restart the reactors.

Brokers are becoming increasingly concerned about the apparent vow of silencetaken by UK banks in relation to the credit crunch. Goldman Sachs, MerrillLynch and Bear Stearns have written off billions of dollars and further lossesare expected. But so far Northern Rock, down 6.9p at 157.2p, remains the onlyUK casualty.

Broker Sandford Bernstein says massive write-offs, as seen in the US, areunlikely among UK banks such as Royal Bank of Scotland, 161/2p cheaper at 439p,and Barclays, off 10p at 514p.

Even so, it estimates Barclays will be hit for [pounds sterling]1.6 billion and RBS for [pounds sterling]500million, with reduced profits of [pounds sterling]3 billion and [pounds sterling]3.5 billion respectively. …

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