Britain's benchmark share index closed at its lowest level in nearly two weeks on Monday, and looked poised for more falls, hit by global growth concerns and fading expectations of any near-term radical measures to resolve the euro zone crisis.
---- Oils, miners, banks hit by growth and euro zone worries
European leaders have agreed on a 130 billion euros ($156 billion) package to revive growth, but the chances of other fresh initiatives at a June 28-29 summit have been slashed by German Chancellor Angela Merkel, who resisted pressure for common euro zone bonds or a more flexible use of Europe's rescue funds.
That delivered a further blow to demand, already bruised by the early indications that June was a gloomy month for the global economy, as signalled by surveys from across the globe last week. "If the market believed that something would come out of the summit, it would surely be rallying now and it's not," said Mike Ingram, market commentator at BGC Brokers, adding that there was also a question mark over how much of the growth package will come in the form of real, fresh cash. "I want to be positive but I am trying to work out what it's based on and I am struggling at the moment."
The FTSE 100 index of UK bluechips ended down 63.04 points, or 1.1 percent, at 5,450.65 points, its lowest close in nearly two weeks and its biggest daily fall since June 1. Traders said the down leg would need to run further before the market looked cheap enough to lure investors back in.
"There is cash out there, the long-only are sitting on cash, there's no doubt about it. Anywhere sub-5,300 (points) they start to look at it, but if the news is desperate at the time, it will still go lower from there," said Steve Larkins, head of sales trading at Seymour Pierce.
Technical charts supported the case for more weakness, after the FTSE 100 broke below both the 50- and the 200-day moving averages late last week. The 20-day line around 5,440 acted as a floor on Monday. "The FTSE looks structured in such a way that further moves down could complete some important bear patterns," technical strategists at Seven Days Ahead said in a note, adding that the daily chart pointed to "a lack of real bull impetus".
The biggest bluechip faller was Shire, down 11.2 percent to 17.45 pounds, with volumes at four times of their 90-day daily average against just 70 percent on the FTSE. US regulators unexpectedly ruled against the British firm in a battle over generic copies of its hyperactivity drug Adderall XR, approving a cut-price version of the medicine from rival Actavis. Analysts sliced their price targets and earnings forecasts for 2013 as a result.
Among the sectors, heavyweight oils and miners shaved around 25 points off the FTSE 100, as crude and metal prices retreated on expectations that slower global growth could crimp demand. Banks - which have the most direct exposure to the euro zone crisis thanks in part to their sovereign bond holdings - sliced off another 7 points. "From a UK perspective, the obviously risky ones are the global (sectors)," said Ian Williams, strategist at Peel Hunt.
"If there is disappointment, it will be the resources that suffer the most. The overall balance has weakened again over the last couple of months: relatively speaking it's the domestic sectors that are delivering fewer downside surprises than the global ones, sectors like retail and travel and leisure.
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