Stricken British bank Northern Rock will be thrown into the cold next week, when the crisis-hit group will be ejected from London's FTSE 100 leading shares index amid shortened Christmas trade.
The FTSE 100 index finished Friday at 6,434.10 points, up 0.58 percent or 37.1 points from a week earlier. So far this year, the key barometer of the London equity market has gained 3.43 percent in value. The FTSE had closed at 6,220.80 points on December 29 last year, the final trading day of 2006.
Next week - the last full trading week of 2007 - many investors will be away from their desks because the market is shut for Christmas Day and Boxing Day public holidays on Tuesday and Wednesday respectively.
On Monday - Christmas Eve - Northern Rock will be demoted from the FTSE 100 in a quarterly reshuffle, due to its dwindling stock market capitalisation, and will be listed on London's second-tier FTSE 250 index instead.
Northern Rock's ejection caps a disastrous year for the bank, which was hit hard by the global credit crunch that has infected world financial markets since August and will herald slower global economic growth next year.
Earlier this year, British finance minister Alistair Darling slashed his forecast for the country's 2008 economic growth to 2.0-2.5 percent from the previous 2.5-3.0 percent, citing the impact of the credit squeeze. This year, commercial banks have become jittery about lending cash to each other amid fears over possible exposure to the dramatic US housing market downturn - creating a so-called credit crunch.
In mid-September, Northern Rock was plunged into crisis when it was forced to seek emergency help from the Bank of England. The news sent customers rushing to withdraw their savings, producing the first run on a British bank in living memory. The clamour died down only after the government vowed to guarantee existing deposits at the bank, which is currently weighing up its options.
A consortium, led by Virgin Group, and British investment group Olivant have confirmed they are vying to take over Northern Rock but there has been increasing speculation the government may have to nationalise the bank.
Aside from Northern Rock, others facing the FTSE 100 exit on Monday include housebuilder Barratt Developments, media firm Daily Mail & General Trust, sugar refiner Tate & Lyle, retailer DSG International, and pub operators Mitchell & Butlers and Punch Taverns. They will be replaced by insurer Admiral, oil explorer Cairn Energy, water company Kelda Group and tourism firms TUI Travel and Thomas Cook. The other two FTSE 100 entrants will be bus and railway operator FirstGroup and security services provider G4S.