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UK's FTSE ends 9-day winning streak as banks fall
October 23, 2013 / 10:24 AM / in 4 years

UK's FTSE ends 9-day winning streak as banks fall

* FTSE 100 falls 0.5 pct to end 9-day winning streak

* Banks take most points off the index

* FTSE 100 3 pct below 13-year peak reached in May

By Sudip Kar-Gupta

LONDON, Oct 23 (Reuters) - Britain’s benchmark equity index fell on Wednesday to end a 9-day winning streak, as a drop in heavyweight banking shares pushed the stock market down from 5-month highs.

Nevertheless, several traders felt any pullback would be relatively short-lived and saw the UK stock market rallying into the end of 2013.

The benchmark FTSE 100 index was down by 0.5 percent, or 34.42 points, at 6,661.24 points in mid-session trade.

Banks took the most points off the market, with the FTSE 350 Banking Index falling 1.5 percent.

Royal Bank of Scotland was the worst FTSE 100 stock.

RBS fell 2.8 percent on concerns over its exposure to a U.S. mis-selling probe on mortgage-backed bonds, and uncertainty over UK Finance Minister George Osborne’s examination of a possible split-up of the bailed-out lender.

“RBS had a decent run-up and then came back on worries over U.S. litigation and Osborne talking about splitting the bank up,” said Cavendish Asset Management fund manager Paul Mumford.

Mumford added that worries about U.S. fines were also weighing on HSBC, which earlier this month was hit by a U.S. securities class action lawsuit ruling.

“There are worries that the Americans are trying to hit the UK banks with further fines,” he said.

The broader European banking sector also fell after a European Central Bank’s asset quality review demanded that banks boost their capitalisation.


Top global bank fines

Financial stocks’ relative weighting on European markets:


The FTSE 100 rose 0.6 percent on Tuesday to reach its highest close since late May after weaker-than-expected U.S. jobs data boosted expectations that the U.S. Federal Reserve would stick with a bond-buying programme aimed at boosting the economy for the time being.

The Fed’s programme has hit bond returns and driven investors over to the better returns available from equities, and stock markets have risen after fears that the programme might have been scaled back by now did not materialise.

The FTSE 100 has risen 13 percent since the start of 2013 and is just 3 percent away from a 13-year peak of 6,875.62 points reached in late May.

JN Financial trader Rick Jones felt the FTSE 100 could finish 2013 in the 6,900-7,000 point range, while Charles Stanley technical analyst Bill McNamara felt buyers would step in if the FTSE fell to the 6,625 point level, which marked a peak for the index reached in September. (additional reporting by Tricia Wright; editing by Ron Askew)

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