Britain’s FTSE falters as jitters hit banks

london — Britain’s top share index slipped on Monday, breaking a three-day winning streak as rising geopolitical tensions sparked a broader sell-off in risky assets, with banking stocks hit the hardest.

Britain’s blue chip FTSE 100 index was down 0.1 per cent at 7,431.49 points by 0858 GMT, while mid caps fell 0.4 per cent.

Shares in precious metals miners Randgold Resources and Fresnillo were the top risers, both up around 1.8 per cent as underlying gold prices climbed to their highest level in nearly a year after North Korea carried out its sixth and most powerful nuclear test on Sunday.

Gold and silver miners are used as proxies for investing in gold, which is considered a safe haven asset in times of political and financial uncertainty.

“There is a thing called habituation. Markets are getting used to it, so while there is a bit of disquiet and there is a bit of noticeable reaction, I would suggest it is actually becoming more and more muted,” Ken Odeluga, market analyst at City Index, said.

“Absent a significant escalation of rhetoric, maybe a significant escalation of the frequency, we are unlikely to see the markets really come off strongly.”

Banks, however, took the most points off the FTSE 100 as shares in HSBC, Barclays and Standard Chartered dropped between 0.2 to 0.8 per cent.

Banking stocks, which are more volatile than other sectors, tend to see their shares sold off more heavily when investors dump risky assets, and the broader FTSE 350 banking sector has lost 3.2 per cent over the past month.

Analysts added that Friday’s weaker-than-expected US jobs report was also putting pressure on the sector, which benefits from higher interest rates, as expectations about another Federal Reserve rate hike this year had been dampened.

3.2% decline in FTSE 350 banking sector over the past month