London's top share index traded below 4,000 for the first time since early December on Friday, after GDP figures confirmed that the country is in recession.
The U.K. FTSE 100 index declined 1.2%, or 46.75 points, to 4,006.65. Earlier in the session, it declined to 3,968.22, breaking though the key 4,000 sentiment level for the first time since Dec. 2.
Other European shares were lower. U.S. stock futures were also in the red but off early lows after General Electric reported a fourth-quarter net profit that broadly matched analyst expectations. See Europe Markets. See Indications.
"GDP figures showed a bigger contraction than anticipated and this was enough to bring in the sellers on mass pushing the FTSE Index through the 4000 level," noted Joshua Raymond, strategist at City Index.
The British economy shrank by 1.5% in the final three months of 2008, the Office for National Statistics reported Friday. The contraction follows a decline of 0.6% in the third quarter, meeting a widely used definition of a recession as two consecutive quarters of shrinking GDP. Read more on GDP.
"Official confirmation of our somewhat inevitable recessionary status caps off a torrid week for UK plc," noted Martin Slaney, head of derivatives at GFT Global Markets.
Banks, insurers drop
Bank shares were slammed at the start of the week as investors fretted that poor trading conditions could lead to further asset write-downs and, potentially, full government nationalization.
The sector fell again on Friday, with Barclays down 13.9%.
The lender's CEO, John Varley, said the bank will make a profit in 2008 even after taking all necessary write-downs, the Independent newspaper reported Friday. He also said that Barclays intended to pay in cash, rather than shares, if it participated in a government plan to insure banks' assets against further losses.
Elsewhere, Lloyds Banking Group fell 3.7%, and Royal Bank of Scotland , declined 3.3%.
Other financials weren't immune, with insurers trading sharply lower. Shares of Aviva reported a fourth-quarter net profit that broadly matched analyst expectations. See Europe Markets. See Indications.
"GDP figures showed a bigger contraction than anticipated and this was enough to bring in the sellers on mass pushing the FTSE Index through the 4000 level," noted Joshua Raymond, strategist at City Index.
The British economy shrank by 1.5% in the final three months of 2008, the Office for National Statistics reported Friday. The contraction follows a decline of 0.6% in the third quarter, meeting a widely used definition of a recession as two consecutive quarters of shrinking GDP. Read more on GDP.
"Official confirmation of our somewhat inevitable recessionary status caps off a torrid week for UK plc," noted Martin Slaney, head of derivatives at GFT Global Markets.
Banks, insurers drop
Bank shares were slammed at the start of the week as investors fretted that poor trading conditions could lead to further asset write-downs and, potentially, full government nationalization.
The sector fell again on Friday, with Barclays down 13.9%.
The lender's CEO, John Varley, said the bank will make a profit in 2008 even after taking all necessary write-downs, the Independent newspaper reported Friday. He also said that Barclays intended to pay in cash, rather than shares, if it participated in a government plan to insure banks' assets against further losses.
Elsewhere, Lloyds Banking Group fell 3.7%, and Royal Bank of Scotland , declined 3.3%.
Other financials weren't immune, with insurers trading sharply lower. Shares of Aviva fell 7.4%, Legal & General shares fell 8.5% and Old Mutual shares dropped 8.2%.
Still, food retailers advanced, with Tesco shares up 1.4%, J Sainsbury shares up 2.1% and Morrison Supermarkets shares up 2.6%.
U.K. food retail shares are "perhaps the safest place to be" said analysts at J.P. Morgan.
The broker said that it believes sterling devaluation will cause food inflation in the first half of the year. Sterling fell to another 23-year low on Friday after the GDP data. The pound was recently down 2.2% at $1.3575.
