By Sara Sjolin, MarketWatch
LONDON (MarketWatch) -- The U.K.'s FTSE 100 index kicked off
August on a downbeat note and closed at the lowest level in three
weeks on Friday, as investors continued to move out of risky assets
against a background of geopolitical concerns.
The benchmark index slumped 0.8% to end at 6,679.18, for a third
straight day in the red. On the week, the index closed 1.7%
lower.
Risk-sensitive sectors, such as banks and miners, posted some of
the biggest losses as investors remained wary of the fallout from
tougher sanctions on Russia, Argentina's selective default,
fighting between Israel and Hamas in Gaza and a broader risk-off
sentiment triggered earlier in the week.
In London, mining firms declined on Friday, ignoring
better-than-expected manufacturing data from China. Shares of
Glencore PLC dropped 1.1%, Rio Tinto PLC (RIO) lost 1.1%, and BHP
Billiton PLC (BHP) fell 0.9%.
Banks were also lower, with shares of Royal Bank of Scotland
Group PLC (RBS) moving 1.5% lower as the bank's Chief Executive
Ross McEwan said it's working to wind down issues that include
"significant conduct and litigation issues that will likely hit our
profits going forward." Legal issues include an international probe
into possible foreign-exchange market manipulation. Investec
Securities analyst Ian Gordon on Friday cut the bank to sell from
hold.
Shares of heavyweight HSBC Holdings PLC (HSBC) fell 1.1%, Lloyds
Banking Group PLC (LYG) erased 1.2% and Standard Chartered PLC
slipped 0.8%
Capita PLC gave up 1.8% after Credit Suisse cut the
business-services company to neutral from outperform.
Shares of GlaxoSmithKline PLC (GSK) erased 1.4% after Moody's
Investors Service downgraded the drug maker's long-term issuer
rating to A2 from A1. Moody's cited to reasons for the move: a
deterioration of GSK's credit profile over the past 6 months and a
put option granted to Novartis AG .
On a more upbeat note, shares of International Consolidated
Airlines Group SA rose 2.2% after the airline and British Airways
parent reported a jump in second-quarter profit.
In data news, the U.K.'s manufacturing purchasing managers'
index showed the sector slowed more than expected in July and
expanded at the slowest pace in a year.
Rob Wood, chief U.K. economist at Berenberg, said in a note that
the weakness in July was "probably in response to escalating
Ukrainian tensions and mediocre euro-zone growth."
He also noted that this was the lowest reading since U.K. growth
surged last summer, which "raises questions about whether the
recent rapid pace of expansion can be sustained in the second half
of the year."
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