By Sara Sjolin, MarketWatch
LONDON (MarketWatch) -- Banks and resources firms led U.K.
stocks to sharp losses on Tuesday, as political paralysis in Italy
after its general elections fueled fears of renewed instability in
Europe, scaring investors out of risky assets.
The FTSE 100 index lost 1.3% to 6,272.85.
The losses tracked a broader negative risk sentiment across
global financial markets.
Italian election results pointed to a fragmented government.
Pier Luigi Bersani's center-left bloc narrowly beat Silvio
Berlusconi's center-right bloc in the lower house but narrowly
missed a majority in the Senate. Both houses are needed to pass
legislation, with the murky results fueling worries this could be
end of the country's reformist drive.
Risk-sensitive sectors such as banks and resources firms posted
the biggest losses.
Barclays PLC (BCS) dropped 3.6%, Royal Bank of Scotland Group
PLC (RBS) lost 3.1% and Lloyds Banking Group PLC (LYG) shaved off
2.7%. Sector heavyweight HSBC Holdings PLC (HBC) eased 2.3%.
Among oil firms, BP PLC (BP) fell 1.7%, Royal Dutch Shell PLC
(RDSB) erased 1.4% and BG Group PLC shed 1.2%. Oil prices were also
lower.
In the mining sector, Vedanta Resources PLC gave up 2.9%, BHP
Billiton PLC (BHP) slipped 2% and Rio Tinto PLC (RIO) fell 0.6%.
Most metals prices were lower.
Shares of CRH PLC slipped 0.4%. The buildings-materials supplier
posted lower pretax profit for 2012 and said it targets further
cost reductions.
On an upbeat note, shares of Imperial Tobacco Group PLC (ITYBY)
inched 0.6% higher, after the company announced plans to raise
dividends 10% a year for the medium term.
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