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FTSE falls to six-week low on weak US data

February 4, 2014

Britain's top shares extended a recent slide yesterday, slipping firmly into negative territory after disappointing US data, with Lloyds leading banks lower after its latest update. The FTSE -100 declined 44.78 points to 6465.66, a fall of 0.7%, dropping to new six-week lows after last week's 2.3% decline. The index turned negative after a sharp miss on the US ISM manufacturing data raised doubts over the strength of the US economic recovery, ahead of jobs data later in the week. "There's been a shift in sentiment in the market, and there's no doubt that people are a lot more wary of figures coming out. After a big miss like that, the FTSE hasn't responded well," Toby Morris , sales trader at CMC Markets , said. The index dropped heading into the close in a bearish move, falling below 6470, seen by analyst Philippe Delabarre at Trading Central as a key support level if the index was to stay in its uptrend since the summer. Over the last fortnight, the index has lost 5.3% on concerns over emerging markets. Unease about slowing Chinese growth and the withdrawal of US monetary stimulus spread from emerging market currencies to the world's large stock markets, resulting in a 3.5% decline for the FTSE -100 during January, its biggest monthly drop since June of last year and its worst January since 2010. Financials stocks trimmed 21.5 points off the index, accounting for nearly half of the total fall. Lloyds Banking Group fell 4% after it said it had set aside a further pound(s)1.8 billion pounds in the fourth quarter to compensate customers mis-sold payment protection insurance (PPI), and dividend payouts were to come later than some in the market had anticipated. Barclays was down 2.5p at 265.7p while Royal Bank of Scotland was 6.7p lower at 333.3p in the wake of its own additional provision for PPI last week. Alongside the concerns over the performance of emerging markets, investor concern has focused on the current earnings season, and whether it will result in profits strong enough to justify lofty valuations after a bumper 2013. Of the 17% of European companies to have reported so far, 44% have missed profits expectations, while 46% have missed expectations on revenue. However, Randgold gained strongly following its results, up 6.2% after posting record production in 2013. Vodafone was another big faller as the mobile phone giant is forecast to unveil a 5% fall in revenues for the final quarter of last year. Its performance is likely to have been impacted by the pound's rise on currency markets and the current volatility in emerging markets such as Turkey and South Africa . Shares in the market heavyweight were down 4.45p to 222.1p to reflect the uncertainty ahead of Thursday's trading update.

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Source: Herald, The (Scotland)

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