FTSE slides over Europe debt fears

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The FTSE 100 Index closed on Monday down 28 points at 5956.3

Medical devices firm Smith & Nephew has been the star performer on the FTSE 100 Index after reports of a takeover approach from US rival Johnson & Johnson.

The group leapt 10% as speculation suggested its suitor was considering whether to return with a higher offer after a £7 billion proposal was reportedly rejected several weeks ago.

But the wider market remained in the red, closing down 28 points to 5956.3 as Wall Street also lost ground.

The Dow Jones Industrial Average fell more than 70 points soon after opening, mirroring declines across the UK and Europe amid renewed sovereign debt fears and concerns over demand in China.

In currency news, the pound clawed back from weakness against the dollar after Halifax said house prices fell 1.3% during December.

Sterling rose to 1.56 dollars, but remained down against the euro at 1.2 euros.

Investor hopes of a takeover battle for Smith & Nephew provided much of the excitement among stocks.

One analyst estimated the group could fetch £9 a share, valuing it at around £8 billion. Its shares closed 62p higher at 712p.

But commodity stocks weighed on the top tier as miners came under pressure amid worries over China’s economy, while Portugal is the latest country to take centre stage in the eurozone debt drama.

Investor attention was also focused on the retail sector after the latest updates from supermarket Morrisons and department store chain Debenhams.

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