Markets react to Spanish bank concerns
The FTSE 100 index opens 44 points down after Moody’s cuts the credit ratings of 16 Spanish lenders, including the UK arm of Banco Santander.
The outlook for the eurozone was looking increasingly bleak after the key agency downgraded the credit ratings of several Spanish banks.
The move came following reports that Spanish depositors had withdrawn 1bn euros (£800m) from Bankia just one week after the lender was nationalised.
A spokesman for Santander UK reassured customers that it was “completely autonomous” from its parent firm, adding that “money raised in the UK stays in the UK”.
As Spain’s woes deepened, investors continued to be troubled by political turmoil in Greece, where a caretaker government has stepped in to steer the debt-ridden country into repeat elections next month.
The FTSE 100 index lost nearly 1 per cent, while France’s Cac-40 fell 1 per cent and the Dax in Germany lost 0.5 per cent. Spain’s Ibex-35, however, rose 0.5 per cent.
Read more: European crisis - where do we go from here?
In the US, a disappointing manufacturing report sparked fears over the country’s economic recovery but all eyes were on Facebook’s pending flotation on the New York Stock Exchange.
The banking sector was hit by the ongoing uncertainty in the eurozone with Barclays falling 0.9p to 181.1p, Royal Bank of Scotland sliding 0.3p to 20.8p and Lloyds Banking Group dropping 0.3p to 27.4p.
Wolseley, which is heavily exposed to the US economy, was the biggest faller after the The Federal Reserve Bank of Philadelphia said its index of factory activity slowed for the first time in eight months. Shares were off 68p at 2121p.
Outside the top flight, Harvester and All Bar One owner Mitchells & Butlers lost more than 1 per cent of its value after it revealed a sharp slowdown in like-for-like sales.
The group, which saw like-for-like sales growth of just 0.2 per cent in the 11 weeks to April 7, saw shares drop 2.2p to 243.8p.