Newspaper article The Evening Standard (London, England)

More Job Losses Feared as Footsie Nears Six-Year Low

Newspaper article The Evening Standard (London, England)

More Job Losses Feared as Footsie Nears Six-Year Low

Article excerpt


LONDON investors were staging a damage-limitation exercise today in the wake of another big sell-off overnight on Wall Street, where shares slumped to their lowest since 1997.

It is feared the worsening banking crisis could lead to a complete nationalisation of the industry on both sides of the Atlantic, destroying shareholder value. City traders today restricted the damage to a fall of 75.97 points at 3774.76, its lowest in almost six years, after the Dow slumped more than 250 points last night. Tonight, New York shares traded below their best levels after disappointing consumer confidence and housing market numbers, and the Dow was up 5.74 at 7120.52.

Justin Urquhart Stewart, joint founder of Seven Investment Management, warned that a drop below 3800 could spark another series of job losses in the Square Mile.

"Investors are achieving smaller returns on equities, and those sitting mostly on cash hardly any returns at all. That leaves just bonds," he said. "As a result, firms will soon be starting to cut costs again, leading to job losses".

Royal Bank of Scotland posted a rise of 0.8p to 22p, spurred on by persistent talk the bank may be split in two. It could also accrue $500 million ([pounds sterling]345 million) from the sale of its operations in Taiwan. But other financials came under the hammer. Lloyds Banking Group retreated 3.8p to 53p ahead of full-year results on Friday. Legal & General lost 2.3p to 34.3p and Friends Provident fell 6.7p to 68.5p as worries about possible dividend cuts persist.

Invensys dropped 5.3p to 148.1p after Morgan Stanley cut its rating from overweight to underweight. Dana Petroleum rose 8p to 942p after striking it rich at a third well in the Rinnes field in the North Sea. Shares of the oil and gas explorer have been upgraded by Morgan Stanley from equal weight to overweight. It repeated its 1140p target.

Morgan Stanley has repeated its overweight rating on rival Tullow Oil, up 101/2p at 6961/2p, with a 900p target, and says both companies offer the best exposure to short-term news flow. It adds that Dana is targeting additional volumes on the Rinnes structure. …

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