STOCK markets plunged across Europe today after inconclusive Italian election results reignited fears over eurozone instability.
The FTSE 100 Index closed 1.3% lower after an 84.9 point fall to 6270.4, while Italy’s MIB plunged nearly 5% and markets in France and Germany fell by more than 2% as the deadlock is expected to make it harder for Italy to pass the reforms it needs to reduce its debts.
Wall Street shrugged off the eurozone worries as the Dow Jones Industrial Average rose more than 50 points in early trade after US new-home sales saw the biggest jump in nearly two decades last month and as US Federal Reserve chairman Ben Bernanke reinforced his commitment to the Fed’s bond-buying programme.
This failed to ease declines on the London market as investor sentiment was also hit by weak manufacturing figures from China and the prospect of spending cuts in America as politicians struggle for an agreement to trim the budget deficit this week.
Today’s sharp decline for the FTSE 100 Index comes after the top flight approached a fresh five-year high yesterday, despite the fall-out from the decision of ratings agency Moody’s to strip the UK of its prized AAA status.
The pound, which received a battering after the ratings blow, fell further today despite euro weakness after Bank of England deputy governor Paul Tucker said he was open to more monetary easing and that the pound may need to fall further.
Banks were hardest hit in the market sell-off, with Barclays down 14.7p at 297p, Royal Bank of Scotland off 15.3p at 339.5p and Lloyds Banking Group 1.8p lower at 53.1p. They were joined by leisure group Whitbread after it reported slower sales growth in the 11 weeks to February 14.
The biggest FTSE 100 risers were GKN up 9p to 261.3p, Randgold Resources ahead 140p to 5615p, Croda International 28p higher at 2584p and CRH up 14p at 1435p.
The biggest FTSE 100 fallers were Barclays down 14.7p at 297p, Royal Bank of Scotland off 15.3p at 339.5p, Vedanta Resources 46p lower at 1173p and Whitbread down 94p to 2469p.