Europe: FTSE 100 sinks over 3% on lockdown fears, banks slide

[BENGALURU] The FTSE 100 marked its worst day in more than three months on Monday as HSBC and Standard Chartered slid on reports the banks were among those that moved allegedly illicit funds, while travel stocks plummeted on fears of more coronavirus-related lockdowns.

The blue-chip FTSE 100 sank 3.4 per cent to a two-week low, with British Airways-owner IAG plunging 12.1 per cent on news that Prime Minister Boris Johnson was pondering a second national lockdown to contain a surge in Covid-19 cases.

An index of travel and leisure stocks, already among the biggest decliners this year, tumbled 5.2 per cent. The mid-cap FTSE 250 fell 4 per cent to a seven-week low, with pub operators plunging on the possibility of new restrictions.

"Even if (the lockdowns) aren't as severe as those introduced in March, (they) will have a big economic impact,"said Russ Mould, investment director at AJ Bell.

JPMorgan Asset Management's global market strategist, Mike Bell said the government's furlough scheme, or something similar, will have to be extended to prevent a significant rise in unemployment.

A rally in UK stock markets has petered out this month as the spread of the novel coronavirus threatens a nascent business recovery, with banking stocks taking a further hit from the Bank of England's announcement that it was looking at negative interest rates.

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The FTSE banking index fell another 5.3 per cent on Monday after media reports said lenders including Barclays, HSBC and Standard Chartered moved large sums of allegedly illicit funds over nearly two decades despite red flags about the origins of the money.

HSBC, already trading at decade lows, slid 5.3 per cent, while StanChart dropped nearly 6 per cent to its lowest since 1998. Barclays tumbled 5.4 per cent.

Aero-engine maker Rolls-Royce plunged 10.8 per cent to its lowest since 2004 after it confirmed it was considering a rights issue of up to 2.5 billion pounds (S$4.4 billion).

REUTERS