In a relatively quiet day for trading, the pound finished marginally up against the single currency despite the FTSE 100 tumbling 3.5%. Banks led the fall in equity prices following the US rejecting plans for carmakers, prompting worries over the future of the industry. Investors promptly became risk averse, with safe haven currencies being the main beneficiaries. The UK was boosted as mortgage approvals grew almost twice as much as expected in February, and to the highest level seen in almost a year.
News out of the eurozone was poor, with Spain and the Republic of Ireland releasing negative news. It was revealed that the Bank of Spain will take over the Caja Castilla la Mancha, which is the first bank bailout in Spain since the credit crisis reared its head. Shares in other major Spanish banks, such as Santander and BBVA, fell over concerns of the health of the Spanish financial sector. Spain has been hit hard in the past 18 months, with unemployment climbing towards 15% and the housing sector becoming increasingly sluggish. It was also revealed that Standard and Poor’s cut Ireland’s credit rating from AAA to AA+ yesterday, over concerns of the country’s worrying public finances. The agency also warned that the rating could be cut again as debt levels increase.
The UK releases their index of services data this morning, whilst the eurozone reveals their consumer price index figures.
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