Source: Sharecast
At 0830 BST, the FTSE 100 was down 1.4% at 9,303.84.
Sentiment on Wall Street took a hit on Thursday and shares of regional banks tanked after Zions Bancorp and Western Alliance said they had been victims of fraud on loans to funds that invest in distressed commercial mortgages.
Zions Bancorp said it would take a $50m charge-off related to a loan issued by its California Bank & Trust division, while Western Alliance said it had begun legal proceedings over a bad loan.
Richard Hunter, head of markets at Interactive Investor, said: "There are increasing signs of storm clouds gathering over markets, with little relief from the building wall of worry.
"Already grappling with stretched stock valuations in the AI space, an unresolved government shutdown and a deteriorating relationship between Beijing and Washington, investors were exposed to a new source of concern in the form of lending practices and bad loans for US regional banks.
"Of themselves, the credit losses announced by two regional banks were limited and seem to be contained. While there are hopes that this could be an isolated incident, the episode brought back unwelcome memories of the Silicon Valley Bank collapse in 2023 and, with several regional banks yet to report, investors are on high alert. Indeed, despite there being no obvious read across to the large banks, the reports were enough to put the skids under the sector as a whole, with losses of around 3% more or less across the board.
"Meanwhile, the economists have their hands tied in the absence of data resulting from the shutdown. Of the limited reports which are trickling through, it is increasingly evident that the labour market has overtaken inflationary concerns in the minds of the Federal Reserve. It remains to be seen whether the current consensus of two further interest rate cuts this year, including a potential bumper cut of 0.5%, proves to be hope rather than expectation."
In equity markets, banks slid, with Barclays, Standard Chartered, NatWest and HSBC among the worst performers on the FTSE 100.
On the upside, Pearson rallied as the educational publisher forecast a pick-up in fourth-quarter sales, leaving it on track to meet full-year guidance.
Updating on trading, Pearson said underlying sales had grown 4% in third quarter, helping lift revenues in the year-to-date by 2%.
Pearson said it had been a quarter of "good progress", with robust performances across all its businesses.
Looking ahead, it continued: "We expect group sales growth and adjusted operating profit in line with market expectations for 2025, with stronger sales growth in the fourth quarter."
Engineer Smiths Group edged up after saying late on Thursday that it had agreed to sell Smiths Interconnect to Molex, a Koch company, for an enterprise value of £1.3bn.
Insulation and building products group SIG was a smidgen higher as it reiterated its full-year outlook but reported no growth in underlying sales in the third quarter.
Market Movers
FTSE 100 (UKX) 9,303.84 -1.40%
FTSE 250 (MCX) 21,761.69 -1.04%
techMARK (TASX) 5,473.65 -1.35%
FTSE 100 - Risers
Pearson (PSON) 1,134.00p 2.19%
Smiths Group (SMIN) 2,392.00p 1.44%
Coca-Cola HBC AG (CDI) (CCH) 3,522.00p 0.40%
Fresnillo (FRES) 2,634.00p 0.08%
RELX FINANCE BV 3.375% GTD NTS 20/03/33 (BW73) 98.64p 0.00%
United Utilities Group (UU.) 1,191.50p -0.04%
Whitbread (WTB) 2,883.00p -0.10%
National Grid (NG.) 1,119.50p -0.18%
Associated British Foods (ABF) 2,220.00p -0.23%
Marks & Spencer Group (MKS) 397.60p -0.23%
FTSE 100 - Fallers
ICG (ICG) 1,902.00p -5.04%
Barclays (BARC) 360.20p -4.75%
Babcock International Group (BAB) 1,120.00p -4.32%
Standard Chartered (STAN) 1,362.50p -4.31%
NATWEST GROUP (NWG) 529.20p -3.17%
BAE Systems (BA.) 1,847.00p -2.96%
St James's Place (STJ) 1,305.00p -2.68%
Melrose Industries (MRO) 597.80p -2.63%
Rolls-Royce Holdings (RR.) 1,110.00p -2.59%
HSBC Holdings (HSBA) 964.40p -2.48%
FTSE 250 - Risers
Trainline (TRN) 254.60p 2.56%
Pantheon Infrastructure (PINT) 103.00p 1.98%
Bridgepoint Group (Reg S) (BPT) 292.00p 1.73%
Hammerson (HMSO) 301.20p 1.28%
Wizz Air Holdings (WIZZ) 1,171.00p 1.22%
CMC Markets (CMCX) 214.00p 0.71%
SDCL Efficiency Income Trust (SEIT) 58.10p 0.35%
BH Macro Ltd. GBP Shares (BHMG) 400.00p 0.25%
Hochschild Mining (HOC) 441.40p 0.18%
IP Group (IPO) 56.20p 0.18%
FTSE 250 - Fallers
Dr. Martens (DOCS) 87.10p -4.34%
Fidelity China Special Situations (FCSS) 303.50p -3.80%
Zigup (ZIG) 318.00p -3.78%
TBC Bank Group (TBCG) 4,155.00p -3.37%
Chemring Group (CHG) 537.00p -3.06%
Ithaca Energy (ITH) 174.70p -3.00%
Energean (ENOG) 881.50p -2.99%
Cranswick (CWK) 4,875.00p -2.89%
Carnival (CCL) 1,897.50p -2.86%
Lion Finance Group (BGEO) 7,435.00p -2.80%
