Market blog: FTSE falls as Bankia shares tumble

17.30: Fears about the possibility of a run on Spanish and Greek banks are fraying investors’ nerves. Britain’s FTSE 100 tumbled 1.24%, or 67 points, to 5,338 and the Mid-250 index trimmed 0.77%, or 82 points, to 10,593. See the FTSE’s performance and the index’s top risers and fallers.

Shares in Spanish bank Bankia plunged as much as 29% as newspaper El Mundo reported that depositors have withdrawn €1 billion since last Wednesday, after the bank received a bailout from the Spanish government, writes Caelainn Barr.

European stock markets continued their decline: Germany’s DAX index lost 01.18% to 6,309, France's CAC 40 index gave up 1.2% to 3,012, and the FTSEurofirst 300 index of top European shares dropped 1.15% to 981.

Losses suffered by JP Morgan have increased by 50% in recent days, surpassing the bank's initial estimated losses of $2 billion by $1 billion.

Markets stateside followed the downturn in Europe: the Dow Jones Industrial Average shed 0.57% to 12,526, the Standard & Poor's 500 index dropped 1.03% to 1,311, and the Nasdaq Composite index reversed 1.16% to 2,840.

Facebook is expected to price its shares later today at between $34 (£21.50) and $38 (£24) a share, valuing the company at $104 billion (£65 billion) when it starts to trade on the Nasdaq on Friday.

Jeremy Tigue, manager of the Foreign & Colonial Investment trust, says the portfolio holds about a £3 million stake in Facebook, which should rise in value at the IPO tomorrow.  

‘We’ve got holdings in funds of funds which have holdings in Facebook like Accel and New Enterprise Associates. So when Facebook does its IPO they will either sell some shares or have a value for their shares, so within our portfolio it’ll reflect the market value of Facebook rather than the last private transaction that took place. It’s all a bit vague at the moment but we think they’re will be uplift.’

National Grid (NG.L) added 9.5p, or 1.4%, to 675p as its full-year profit before tax ticked up 5% with a positive outlook.

Telecoms company Talktalk (TALK.L) soared 26.3p, or 19.8%, to 159p as its full year earnings before tax are up 18%.

Citywire Top Stock Yule Catto (YULC.L) shed 8%, or 17p, to 197p as analysts at Numis cut its target share price from 321p to 309p on a 11% drop in volumes in Europe and North America.  

Kesa Electricals (KESA.L) slumped 7.3p, or 13.6%, to 46.8p as underlying sales fell 5.9% in the last quarter of 2011, prompting analysts at Barclays, Seymour Pierce and Panmure to cut their share price on the stock.

International Consolidated Airlines (IAG.L) fell 9.2p, or 6%, to 143.5p to the bottom of the FTSE 100 index.

12.30: The FTSE 100 continues to fall amid further worrying signs of eurozone contagion spreading to Spain, writes Gavin Lumsden. The country succeeded in selling nearly €2.5 billion government bonds at an auction but had to pay a yield of 4.375% and 4.876% on the 2015 and 2016 debt, far higher than it did at last month's auction. The FTSE 100 shed 88 points to 5,317.

Let's catch up with some company news.

French Connection (FCCN.L) slumped 22%, or 9p, to 31p after the fashion retailer issued its third profit warning in seven months. Revenue dropped 9.5% in the first quarter of its financial year and the second half is not expected to bring an improvement.

Barrie Cornes of Panmure Gordon braved a ‘buy’ on Aviva (AV.L) as the embattled insurer fell 4.7% or 13.5p to 267.5p after releasing weak first-quarter results. The insurer, which is seeking a replacement for chief executive Andrew Moss after falling victim to the ‘shareholder spring’ revolt, has launched a strategic review and said it would seek to strengthen its balance sheet. This could mean the sale of its US business or, as Shore Capital fears, a cut in the dividend, which would hurt investors who have piled into the high-yielding stock.

Harry Philips, analyst at Oriel Securities, liked the news of a possible breakup by Cookson (CKSN.L), up 7% or 45p to 688.5p. The industrial materials supplier, which is a member of Citywire Top Stocks, has admitted a partner from Cevian Capital, the shareholder activist, to its board. 

Cookson, which has been criticised by shareholders for the high levels of boardroom pay, will consider splitting off its engineered ceramics and performance materials. The developments should also please Standard Life Investments’ stock picker Edward Legget, who holds Cookson in his UK Equity Unconstrained fund. Philips retained his ‘buy’ stance and said the shares could rise to 900p and beyond.

Lamprell (LAM.L) edged up 2.5p or 2% to 129.5p as controversy continued to rage about yesterday’s profits warning which wiped off 57% of the oil and gas contractor’s share price.

Investors are furious that the warning came just three weeks after two senior managers sold £1.7 million of shares in the FTSE 250 company.

Scott Doak, Lamprell’s integration and development director, sold about 221,000 shares at an average price of 360p. Kevin Isles, executive vice-president of the company’s manufacturing operations in the United Arab Emirates, sold 250,000 shares at an average price of 361.7p apiece.

The pair are not board level directors and so did not have to seek approval for their trades, chief executive Nigel McCue told the Financial Times.

Nevertheless, investors are angry at the turn of events. Lamprell blamed delays to comoponent deliveries and unexpected costs for pushing it into the red.

Andrew Whittock of Liberum Capital slashed his earnings growth forecasts for the next three years by 63%, 45% and 27% respectively. He stuck to a ‘buy’ recommendation but did not expect the share price to recover until the company restored investor confidence.

Meanwhile, 3i, the poorly performing private equity investment trust, was basically unchanged as it confirmed that chief investement officer Simon Borrows would replace Michael Queen as chief executive.

Investors prepare to swoop on cheap euro assets

10.43:  Just listened to a webcast with three of Invesco Perpetual's income fund managers (not pictured). All of them said they were well positioned for the eurozone crisis - natch. Mark Barnett, manager of the group's UK Strategic Income and the Keystone investment trust, said he had 'half expected' events to pan out the way they have.

Intriguing comment from Doug McGraw, manager of Invesco Perpetual Global Equity Income , who said he'd compiled a buy list of 'world class' European companies whose shares will slump in the event of a euro breakup. No details though.

Barnett also said the trading losses at JP Morgan were politically very significant as the investment banking giant had fingers in so many pies. Said if the bank was forced to split its investment banking and retail operations it would 'have an impact on dividends'.

Barnett didn't expect to buy bank shares anytime soon though McGraw, like many, is a fan of HSBC.

Its shares (HSBA.L) dipped 1% to 528p after chief executive Stuart Gulliver attempted to reassure investors that its three-year turnround plan to focus on emerging markets and cut costs was on track after one year. 'We are delivering with good momentum against a difficult backdrop,' he told reporters on a conference call.

The FTSE 100 has fallen again, down 50 points at 5,351.

09.20: Eurozone concerns continued to dominate sentiment on Thursday morning as Britain’s FTSE 100 gave up 0.3%, or 16 points, to 5,389 and the Mid-250 index inched ahead 0.69%, or 74 points, to 10,675, reports Caelainn Barr. See the FTSE’s performance and the index’s top risers and fallers.

Greece is expected to fall behind on austerity plans as the country has been left in limbo given the absence of an elected government.

The plan to privatise public services has been suspended until a government has been elected, and the European Central Bank has already refused further liquidity to banks as recapitalisation plans for the sector haven’t yet been put in place.  

Stock markets in Europe also continued to fall: Germany’s DAX index shed 0.16% to 6,374, France's CAC 40 index lost 0.47% to 3,034, and the FTSEurofirst 300 index of top European shares declined 0.3% to 990.

Interdealer broker ICAP (IAP.L) took on 8.5p, or 2.5%, to 345p on news that the group is in talks to buy UK fledgling companies exchange group Plus Markets Group. Analysts at Barclays raised their target price on the stock from 435p to 440p, and UBS increased their rating on the stock from ‘sell’ to ‘neutral’.

Citywire Top Stock Cookson (CKSON.L) jumped up 59p, or 9.3%, to 703.5p as the group considers a potential demerger of its two main units: ceramics and performance materials. 

Concerns about the eurozone and banking system saw financials lead the way down on the FTSE 100 index: Royal Bank of Scotland (RBS.L) lost 0.42p, or 1.92%, to 21.5p; Lloyds (LLOY.L) dropped 0.6p, or 2%, to 28p; Barclays (BARC.L) reversed 3.7p, or 1.9%, to 185p; and Aviva (AV.L) fell 4p, or 1.4%, to 277p.