MW: Banks weigh on FTSE 100 after weak global data
By Sara Sjolin, MarketWatch
LONDON (MarketWatch)—U.K. stocks slumped Friday after disappointing growth data from China spooked investors out of equities, while a surprise decline in U.S. consumer sentiment added further pressure.
The FTSE 100 index UK:UKX -1.03% dropped 1% to 5,651.79, snapping a two-day winning streak. On the week, the index closed 1.3% lower.
Banks added pressure to the index and tracked a broad decline in European financials on the back of a surge in bank borrowing in Spain. Spanish banks’ gross borrowing from the European Central Bank nearly doubled in March compared with the prior month. Spain stocks off, yields up on bank borrowing jump
Shares of Barclays PLC UK:BARC -3.83% BCS -4.36% fell 3.8%, Lloyds Banking Group PLC UK:LLOY -3.63% LYG -4.50% gave up 3.6% and Royal Bank of Scotland Group PLC UK:RBS -3.51% RBS -4.47% shed 3.5%.
In afternoon trading, stocks got an extra push lower after a preliminary reading for U.S. consumer sentiment in April declined to 75.7 from a final March level of 76.2, according to a gauge released by the University of Michigan/Thomson Reuters. Analysts had expected a reading of 76.4.
U.K. stocks also keyed off signs of slowing growth in China. Gross domestic product for the first quarter in the world’s No. 2 economy cooled to 8.1% expansion, slipping below analysts expectations of 8.3%. The previous quarter, the economy grew 8.9%. China growth slowest since global crisis
“But the March data were on balance better than expected and suggested that the Chinese economy stabilized,” analysts at Danske Bank said in a note. “In our view the current data in China do not call for a major adjustment in fiscal policy. The reserve requirement is expected to be cut at least twice and this should support further acceleration in credit.”
Most miners closed with losses, following metals prices lower. Rio Tinto PLC UK:RIO -1.18% RIO -2.33% lost 1.2%, Fresnillo PLC UK:FRES -2.29% gave up 2.3%, while Vedanta Resources PLC UK:VED -2.23% shed 2.2%.
Some energy-sector shares moved into negative territory as crude-oil futures softened. Tullow Oil PLC UK:TLW -2.17% declined 2.2% by the close and BG Group PLC UK:BG -1.46% moved 1.5% lower.
And Sage Group PLC UK:SGE -2.64% shed 2.6% after Jefferies Group downgraded the software company to hold from buy.
Sara Sjolin is a MarketWatch reporter, based in London.
