London markets shed earlier gains as nervousness returns to the banking sector

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Optimism in London markets on Friday morning after a $30 billion (£25 billion) cash injection into a struggling US bank evaporated by mid-afternoon as global markets continued to feel the consequences of a string of failures.

The FTSE 100 initially gained exactly 100 points in the early hours of trading on Friday morning.

It came as a number of US banking giants banded together to pump money into First Republic Bank — another mid-tier US lender that has struggled in recent days.

But by afternoon gains had reversed and London’s top index was instead trading exactly 100 points down – down about 1.3%.

By the time markets closed, it was down nearly 75 points, or 1%, to 7,335.

It came as First Republic’s share price began falling again as markets opened in the US. The stock lost about a quarter.

Credit Suisse — the Swiss banking giant that has also struggled — was also down 10%.

The bank received £45 billion from the Swiss central bank earlier this week to keep it running.

This meant that any gains made by the FTSE 100 on Thursday were wiped out, while markets in the US and Europe were also sharply lower.

First Republic shares had fallen nearly three-quarters in just a week as they rebounded from the collapse of three other US banks and weakness at Credit Suisse.

On Thursday night, JP Morgan Chase, Citigroup and other big US companies deposited $30 billion (£25 billion) with the troubled lender.

Chris Beauchamp, chief market analyst at online trading platform IG, said: “Hopes that the banking crisis would ease further have themselves faded as stocks fell again, reversing much of yesterday’s rally.

“Credit Suisse remains the bugbear for Europe, while in the US First Republic worries are still the main reason for losses.

“This week has been a liquidity crunch, but it appears the actions taken by authorities to remedy the situation have not fully reassured suspicious investors.”

https://www.standard.co.uk/business/business-news/london-markets-lose-earlier-gains-as-jitters-return-to-banking-sector-b1068182.html London markets shed earlier gains as nervousness returns to the banking sector

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