FTSE 100 drops 1.12% as insurers take a battering

Wednesday, 08 July 2009 05:03

The FTSE 100 dropped further today - losing 1.12 per cent.

The index closed at 4,140.23, losing 46.77 points, as insurers took the greatest hit and investors looked to defensive stocks.

Legal & General closed down 8.66 per cent, Aviva lost 8.46 per cent and Prudential was down 6.33 per cent - as Alistair Darling's plans for greater financial regulation unveiled in parliament caused shivers among investors.

British Land dropped 5.95 per cent and Land Securities dropped 5.01 per cent.

The only stocks to see much advancement were those with a solid defensive hue.

Pharma giant GlaxoSmithKline was up 1.54 per cent, Imperial Tobacco gained 0.76 per cent and Vodafone rose 0.66 per cent.

Next - sticking out a touch - rose 0.86 per cent.

In morning trading in the New York, the Dow was also down - losing 0.43 per cent at 11:59 EDT (16:59 BST).

David Jones, chief market strategist at IG Index, said: "In the City today, eyes will have been focussed on Alistair Darling's plans to impose tougher regulations on the financial services industry.

"Proposals include making banks hold higher levels of capital and to increase liquidity, as well as strengthening the FSA's powers. Whether this attempt to boost confidence in the financial sector will work is up for debate; it will take a lot more than words to reanimate investor interest, especially in the summer months, when trading is traditionally muted."

He added investors will now be looking to see whether the proposals will have any significant impact and, if they do, whether they will revive confidence in the financial sector or simply act as an unwelcome restraint on the battered banks.

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