A DOWNGRADE on Spain’s credit rating added to pressure closer to home today as London’s FTSE 100 Index continued its retreat from the 6,000 barrier.
The top flight stood 48.9 points lower at 5888.9 as sentiment continued to be driven by fighting in Libya and Brent crude oil at 115 US dollars a barrel.
In a further warning to UK bank investors over the threat of Europe’s debt crisis, Moody’s reduced its rating on Spain by one notch to Aa2 and warned that a further downgrade could be in the offing in the future.
A larger-than-expected contraction in Japan’s economy had earlier spooked Asian markets, while in the UK investors were shaken by a profits warning from Home Retail Group after the Argos owner admitted trading conditions were "more difficult and volatile" than it had expected. Shares fell 8% or 16.8p to 194.2p.
Other retailers were under pressure, with B&Q owner Kingfisher down 4.55p at 240.05p and Marks & Spencer off 5.4p at 335.5p.
There was better news from the pub sector after Chef & Brewer owner Punch Taverns reported a bigger-than-expected rise in second quarter sales. Numis Securities increased its forecasts by 3% to reflect the improvement in the managed pub estate. Punch shares were 4p higher at 75p, a gain of 6%.