UK equities reverse earlier gains.

8th December 2011

Ian Copelin, Investment Director, my wealth, comments, “It was another volatile day for the FTSE-100.  Having opened on a firm note, the Footsie went even higher following the announcement from the US Labor Department that less Americans than expected filed applications for unemployment benefits last week (jobless claims fell by 23,000 to 381,000 in the week ended 3rd December), a signal that the US economy continues to show solid momentum (the US job market has been the Achilles heel of its recovery – so this improvement is very positive).

Unfortunately, the Footsie reversed a 58 point rise and ended the day down 63 points (or 1.14%), following a release of a document from the European Banking Authority which said that Europe’s banks will need to raise €114.7 billion in fresh capital as part of measures introduced to respond to the sovereign-debt crisis.  German banks need €13.1 billion, Italian banks €15.4 billion and French banks €7.3 billion.  Spanish bank, Banco Santander (which bought Abbey National and Alliance & Leicester in the UK), needs to raise €15.3 billion alone.

British banks don’t need to raise fresh capital.

Elsewhere, the Bank of England announced that it is keeping interest rates unchanged at 0.5%, while the ECB cut interest rates by 25 basis points to 1%.  Both announcements were widely expected.”