FTSE surrenders gains on Spain debt

FTSE surrenders gains on Spain debt

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The FTSE 100 fell 23.9 points at 5867.1 in early trading

The London market’s pre-Christmas rally has run out of steam as the FTSE 100 Index fell back from Tuesday night’s highest close since June 2008.

With little corporate and economic news to drive buying interest, the top flight index surrendered Tuesday’s gains to stand 23.9 points lower at 5867.1.

One reason for the poor session was a warning from credit ratings agency Moody’s that it may downgrade Spain’s debt because of the country’s high financing needs in 2011 and its shaky banking sector.

This fuelled worries over the sovereign debt exposure of UK banks as Barclays fell 7.65p to 264.35p and Royal Bank of Scotland dropped 0.4p to 41p.

The biggest rise in the top flight came from Lakeside shopping centre owner Capital, which climbed 3% or 10.8p to 407.1p after US firm Simon Property Group wrote to the company outlining its plans for a £2.9 billion takeover.

The move is likely to add to pressure on Capital’s shareholders to veto the UK’s firm plans for the takeover of the Trafford Centre in Manchester.

Outside the top flight, the rapid ascent for shares in fashion firm Supergroup juddered to a halt after the company posted maiden interim results.

Profits rose 68% but shares slumped 16% after the Superdry owner warned rising raw material prices could hit earnings next year. Shares fell 265p to 1363p, taking the stock back to the level seen in late October.

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