Reuters: Hot Stocks: Euro zone concerns rattle Britain's FTSE 100

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Euro zone concerns rattle Britain's FTSE 100 Mar 27th 2013, 12:44 Wed Mar 27, 2013 8:44am EDT * FTSE 100 down 0.7 percent * Europe contagion concerns weighs on index * Financials top fallers, ICAP slumps on profit warning * Banks outperform after on shortfall relief * Tui Travel rallies on profit guidance By David Brett LONDON, March 27 (Reuters) - Britain's top share index reversed early gains by midday on Wednesday as a weak bond auction and more signs of political paralysis in Italy added to a growing sense that the euro zone is slipping back into crisis. London's blue chips have fallen 2 percent since the full extent of Cyprus's plight became known two weeks ago, with investors increasingly convinced its bailout outlines a new template that will make the private sector pay more for future euro zone rescues. By 1154 GMT, London's blue chips were down 44.48 points, or 0.7 percent at 6,354.89, testing 3-month rising support - one technical measure of support for a market that is trending up when viewed in the longer-term. "The handling and terms of the Cyprus bailout threaten to undermine long-term confidence and trust in European institutions at precisely the wrong time," said Luca Paolini, Chief Strategist at Pictet Asset Management. "The bail-in of depositors ... cannot be simply dismissed as a containable, local problem; it could potentially be a watershed event, undermining ECB president Mario Draghi's pledge last year to do 'whatever it takes' to save the euro," he said. The market deepened losses after gloomy comments from Italy's centre left leader Pier Luigi Bersani over the current political deadlock in the country. Yields on five-year Italian government bonds climbed to their highest since October last year at its latest auction. ICAP WARNS ON EUROPE HIT Financials were the sharpest fallers - given their exposure to Europe's debt crisis - although there were also specific issues weighing on individual stocks. Interdealer broker ICAP shed 7.1 percent after issuing a profit warning as the latest chapter in the crisis dashes hopes of the buoyant trading volumes of early this year continuing. Britain's largest insurer Prudential fell 4.1 percent after the company was fined 30 million pounds ($45.5 million) for failing to tell the UK financial regulator about its ill-fated takeover attempt of Asian rival AIA around three years ago. Prudential was also among a batch of London blue chips that were trading without their dividend entitlement including British Land, BSkyB, Schroders and Smiths Group, taking a total of 3.08 points off the index. UK banking stocks, however, bucked the weaker trend as investors initially reacted positively to a Bank of England committee's call for them to raise 25 billion pounds ($37.89 billion) in capital to absorb possible future losses, at the low end of the forecasted range. Simon Maughan, strategist at financial group Olive Tree, said the shortfall comes from under provisioning for real estate and euro collapse, higher risk weightings and under reporting of PPI and other customer claims. "These adjustments are likely to apply to Royal Bank of Scotland, Lloyds Banking Group and Barclays BARC in that order given reported Basel III capital and extent of real estate, EU and PPI/swap mis-selling exposure," he said. Among individual stocks heavyweight mobile telecoms firm Vodafone experienced some selling pressure, albeit in light volumes, took 8 points off the FTSE 100 alone having recently been lifted by M&A speculation. On the upside, the world's biggest tour operator TUI Travel jumped 3.1 percent after it said it was confident of hitting the top end of profit guidance for 2013 after a strong finish to winter trading and rising summer bookings. (Reporting by David Brett; editing by Patrick Graham) Link this Share this Digg this Email Reprints

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