The FTSE 100 suffered a fall on Thursday (July 31st) amid poor performance from major banks and growing uncertainty across Europe.
Lloyds was one of the main disappointments throughout the day as the bank, which had posted some positive results of late, dropped three per cent. This impacted on other financial stocks resulting in the FTSE 350 Banking Index retreating by 1.2 per cent. Lloyds had been performing well in recent weeks after rising for the last seven sessions.
There had been cause for optimism around Lloyds with the part-nationalised bank reporting a 32 per cent increase in first-half profits. However, traders and analysts said that the rise in its bad debts had gone some way to undo the positive work the bank had achieved over the past sessions.
Ongoing tensions between Russia and Ukraine has also made traders increasingly cautious. The US and the European Union recently announced a new range of sanctions for Russia. The Kremlin has been criticised for its continued backing of Ukrainian rebels, who have been accused of shooting down Malaysia Airlines flight MH17 killing 298 people. The sanctions targets the oil sector, defence equipment and sensitive technologies.
Earlier in the week, BP warned that any sanction levied against Russia could impact on its own operations. The British oil giant currently owns a 20 per cent stake in Russian energy firm Rosneft and believes that restrictions could hamper its relationship with the organisation and disrupt its plans for expansion.
BP said in a statement: "Any future erosion of our relationship with Rosneft, or the impact of further economic sanctions, could adversely impact our business and strategic objectives in Russia, the level of our income, production and reserves, our investment in Rosneft and our reputation."
The FTSE 100 has still failed to breach the 6,900 mark as many expected it would after reaching a peak of 6,894.88 points in mid-May.
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