Britain's leading share index fell on Monday, on weakness in heavyweight mining and energy issues as commodity prices retreated, while a partial recovery by banks brought blue chips back from intra-days lows for the month. At the close, the FTSE 100 index was down 85.03 points, or 1.6 percent, at 5,129.62, having bounced off the session low of 5,059.22.
Banks were weaker after a volatile session as investors digested the much-anticipated Independent Commission on Banking (ICB) report on reforming the sector. Part-nationalised Royal Bank of Scotland and Lloyds Banking Group shed 3.4 percent and 1.5 percent respectively, while Barclays fell 1.6 percent, albeit with all three well above hefty session lows.
Barclays' shares hit a 52-week low earlier in the session. "It seems that the ideas in the report have been touted around for so long that it is no longer news. We all knew about the ringfencing of banking divisions so the whole thing has not surprised us in the slightest," said James Hughes, senior market analyst at Alpari UK.
Global banking heavyweight HSBC shed 2.4 percent, with the sector weighed also by eurozone debt concern and by talk of a downgrade for French banks. But emerging markets-focused lender Standard Chartered bucked the trend, adding 0.7 percent. "With the exception of Standard Chartered, the implications of the ICB report are negative to long-term return on equity prospects for all UK banks," Shore Capital said.
Integrated oils were the biggest drag on the blue chips, with BG Group down 2.2 percent. Miners suffered similar falls in tandem with copper prices, which fell to one-month lows on concern about policymakers' ability to permanently solve Europe's debt crisis and worries about economic and demand slowdown. While Greece pledged fresh measures over the weekend to help it meet fiscal targets and secure bailout funds, a hardening in the tone of some German politicians over the possibility of a Greek debt default unnerved markets.
Market heavyweight Vodafone was also a big drag, the mobile telecoms operator losing 2.5 percent after a Financial Times report said Verizon Communications had ruled out a return to a recurring dividend from the two companies' US mobile phone joint venture.
US blue chips were 0.6 percent lower by London's close, well above sharper early falls, while the Nasdaq was up 0.2 percent, boosted by gains from semiconductors after Broadcom Corp agreed to acquire NetLogic Microsystems in a $3.7 billion deal. Back in London, chip designer ARM Holdings was among the minority FTSE 100 gainers, up 1.6 percent on the sector consolidation move. Man Group was the top FTSE gainer, up 5 percent, with traders seeing the hedge fund manager as a likely beneficiary of market volatility. "A day of ranges as the bulls try to guide us to Fridays levels, and the bears want to test the lows of Tuesday, neither one seeming able to win. But there is value at these levels," said Mic Mills, head of electronic trading at ETX Capital.
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