A positive performance by the FTSE, which was momentarily propped up by a rise in banking stocks, turned out to be short-lived for UK markets today.

Renewed fears of global debt outweighed the positive performance made by banks.

UK markets remained mostly negative after credit ratings agency Standard and Poor’s reduced its rating for Spain from stable to negative.

In a report on the Guardian website, the ratings agency said that ‘Spain faced a deeper deterioration in public finances and a longer period of weakness than it had expected in January.’

Yesterday, ratings agency Fitch had downgraded Greek debt to BBB plus with a negative outlook, marking the first time in 10 years that the country has been given a score below A by a leading rating agency.

Not surprisingly, the reports impacted Wall Street negatively, driving the Dow down 22.9 points to 10263.07 and the S&P 500 5.68 points lower at 1086.26 by 2.55pm (London time).

DuPont, United Technologies, Caterpillar, JPMorgan Chase and Intel were the worst performers on the Dow this afternoon, slipping between 0.85% and 1.33%.

3M, Pfizer, Walt Disney, Chevron and Proctor & Gamble were the day’s biggest gainers, meanwhile, rising between 0.11% and 1.56%.

At home, bank stocks received an impetuous from Chancellor Alistair Darling’s pre-budget statement, which revealed that banks will have to pay a one-time tax of 50% on banker bonuses.

Investors, who had been expecting more stringent impositions on banks, reacted positively to this news, pushing banks to the top of the FTSE 100 leader board.

At 2.55pm Standard Chartered and Lloyds Banking Group were up 2.96% and 1.49% respectively, along with SEGRO, InterContinental Hotels and Carnival.

Miners were some of the worst performers on the other hand, with Fresnillo, Kazakhmys and Vedanta all down between 2.83% and 3.54% today.

Overall the blue-chip index was down too, falling by 30.63 points (0.59%) to 5192.5. The FTSE 250 was down a more significant 111.24 points (1.23%) to 8920.52.

In economic news, a report released earlier this morning revealed that the UK’s deficit on trade in goods and services came in at £3.2 billion in October, compared with a revised deficit of £3.1 billion in September.

The surplus on trade in services was £3.9 billion in October, unchanged since September.

[1] Source: City AM (9 December 2009)
[2] Source: The Independent (9 December 2009)

By Anthony Grech, Research Analyst, IG Index.

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