Banks and miners are leading the market lower as global fears return to haunt investors after yesterday's - relative - calm.
The FTSE 100 is down 53.03 points at 5645.90, on worries about the European sovereign debt crisis spreading from Ireland and Greece to Belgium, Portugal and Spanish. Spanish bond yields, for example, have risen to 5.25%, their highest since 2002 as the pressure on the Eurozone continues unabated. With bailouts for Greece and now Ireland, some within the Eurozone seem to be suggesting Portugal should bite the bullet and apply now, before it is forced to do so later. All this has left the euro weaker again, down to a fresh two month low against the dollar. Sterling also fell 0.3% against the US currency to $1.5704, in the wake of the euro's decline, but ticked up 0.3% against the single currency.
On top of all that there were concerns about war in Korea, and China acting to dampen down demand by tightening monetary policy. Ilya Spivak, currency strategist at Daily FX, said:
The toxic cocktail of geopolitical and sovereign risk weighing on sentiment is a familiar one at this point. Sellers were treated to renewed saber-rattling in North Korea, with the official news agency saying further escalation will lead to open war, overlaid with lingering anxiety about the Eurozone periphery as Ireland prepared to see the results of a by-election that could mark the beginning of the end for the current government as well as a vote on an austerity budget in Portugal. All this plus the spectre of Chinese monetary tightening, with higher reserve ratios set to take effect next Monday, proved hard to swallow. It appears the path of least resistance points lower for the spectrum of risk assets for the time being, with the safety-linked US dollar on pace to outperform through the year-end.Lloyds Banking Group Standard Chartered BHP Billiton Antofagasta Rio Tinto
