Britain's FTSE 100 share index was indicated 0.9 percent down on Wednesday, as investors fretted over the outlook for corporate earnings with oil prices staying strong and the dollar sliding across the board. The London Stock Exchange (LSE) experienced problems with data distribution, extending its closing auction to 1800 GMT, and prices at the time of writing were subject to change.
The FTSE 100 was indicated to have fallen 54.8 points to 6,420.1, ending lower for a fourth time in five consecutive sessions. Wall Street and Continental European shares also slid.
Banks bore the brunt of the decline, all ending lower. Alliance & Leicester lost 5.2 percent and Northern Rock shed 7.4 percent. Barclays fell 2 percent and Royal Bank of Scotland shed 3.9 percent after Bernstein cut its price targets on both banks.
The sector was still heavily influenced by renewed concerns over the extent of the damage from the US subprime crisis after Citigroup said over the weekend it may write off a further $11 billion of its subprime exposure.
Also at the forefront of investors' minds, the Bank of England's Monetary Policy Committee is due to issue its November interest-rate verdict on Thursday, and is widely expected to hold borrowing costs at 5.75 percent.
The dollar tumbled to record lows versus the euro and a basket of major currencies after comments by a Chinese official stoked fears the central bank of the world's fourth largest economy would reduce its holdings of US assets.
"A fair proportion of the dividends of the big companies are in dollars, maybe 25 to 30 percent," said Mike Lenhoff, chief strategist at Brewin Dolphin. He added that worries about a slowdown in US and European economic growth were spooking the market. "Given that America is also slowing, and given the importance of America in world trade, it just means that the wash-back will be felt here in the UK and in Europe, so the outlook for earnings is certainly not improving and if anything it's worsening," he said.
Surging oil prices also fanned selling of the US currency. US crude oil held strong, but retreated from its earlier all-time high above $98 a barrel after US data showed costly oil was taking a toll on demand in the world's top consumer.
Oil major Royal Dutch Shell advanced 1 percent and gas producer BG Group added 0.5 percent. But BP shed 1.5 percent after trading without the right to the next dividend. "Surely a time will come when it does have some sort of impact and I would have thought we must be approaching it," Lenhoff said of the oil price.
"The pain threshold cant be too far away from here," he said. "It does have a squeeze on real disposable income which will affect consumer spending, so that will affect growth."
British Energy fell 7.2 percent after the nuclear power generator said it was still too early to say when four nuclear reactors at Hartlepool and Heysham might resume operations, following their closure for wiring problems last month. ITV, Old Mutual and Unilever also fell after going ex-dividend. Rolls-Royce put on 2.1 percent after the aircraft engine maker said it had won an $800 million order for Trent XWB engines from International Lease Finance Corp.
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