Banks and miners are pulling the market lower at the moment, with little around to brighten the gloom.
The problems at Citigroup and Merrill Lynch have turned the spotlight once more on the effects of the sub-prime crisis and the credit crunch, and investors seem to have decided they really do not want to own bank shares at all at the moment, thank you very much.
A negative note on the UK banking sector today from Goldman Sachs - which was one of the few banks to come out of the credit crunch relatively unscathed - has not helped. Goldman's analysts said: "The domestic UK banks are perhaps not as cheap as some may suggest, particularly if the economy slows faster than expected during
the second half of 2008."
They have cut their price target for Barclays from 439p to 482p, Lloyds from 413p to 498p and Royal Bank of Scotland from 455p to 614p. They are neutral on RBS but rate the other two as conviction sells. Barclays fell 5.5p to 459p, Lloyds 17p to 389p and RBS 11.5p to 380.5p.
But a buy note from Goldman lifted British Airways 7.25p to 284.75p.
As for the miners, their shares are lower on concerns that the US is heading for recession and so demand for metals will fall. Copper, zinc and gold have all fallen, helping push Vedanta Resources 105p lower to £18.85 and Antofagasta down 35.5p to 597p. Rio Tinto - facing a bid approach from BHP Billiton - fell 218p to £47.78 despite unveiling good production numbers for 2007.
Another major loser was Cable & Wireless, 11.2p lower at 159.2p as Morgan Stanley downgraded from overweight to equal weight and cut its price target from 212p to 190p. Lehman Brothers was also negative on the whole telecom services sector, moving from positive to neutral. It has gone from overweight to equal weight on Vodafone, but raised its target from 220p to 230p. Vodafone is down 0.9p to 180.7p.
All in all, the FTSE 100 has fallen below 6000 for the first time since the middle of August. It is now down 110.4 points at 5915.2, while the FTSE 250 is 203.9 ponts lower at 9561.9.
