While trading was flat throughout most of the day on Wednesday, UK’s large-cap index, the FTSE 100, dropped off sharply at the end of the day.
The UK’s benchmark index closed the session at 5,872, after falling by 56 points, which represents a loss of nearly 1% of the index’s value. The FTSE 250 Index also closed in negative territory, losing 80 points, or 0.7%.
A single company, Essar Energy (ESSR), put the largest weight on the overall market after plunging by 7.5% during trading. This comes on the same day that Credit Suisse cut its recommendation on the company, citing concerns over Essar's short-term financing needs. On Monday, the UK-traded, Indian-focused energy company reported a steep drop in full-year profit for 2011, causing shares to sink by 15%. Shares in the company have lost over 70% of their value since listing on the London Stock Exchange in May 2010, and Essar is at risk of being taken off of the FTSE 100 when the index is next rebalanced.
Meanwhile, British broadcaster ITV (ITV) saw its shares rally by nearly 7% on the back of better-than-expected full-year earnings results. Standard Chartered (STAN) also reported its full-year results, posting its ninth consecutive year of record profits as it continues to focus on expanding in growing Asian markets. While shares in the bank were initially in positive territory, they later edged down to close with a slight loss.
These market movements come as the European Central Bank’s emergency loans were distributed to more banks than expected. The ECB announced that it distributed 530 billion euros in low-interest loans to banks. This is the ECB’s second round of offering long-term credit to banks. These loans are designed to help stimulate the wider economy, since it is expected that banks will lend this money to businesses and consumers to fuel economic growth.
