Banks and miners drag FTSE down early
The leading shares index fell early on Monday, snapping a three-day winning run, as fears of a deeper and longer slowdown weighed on banks, while weaker metal prices hit mining stocks.
FTSE gains as metals spur minersBy 8:51 a.m., the FTSE 100 was down 48.9 points, or 0.9 percent at 5,586.7, after gaining 4.2 percent last month. The UK benchmark is still down nearly 13 percent so far this year.
Chancellor Alistair Darling said on Sunday that the country's economic downturn was likely to be deeper and last longer than originally feared and it might turn out to be the worst for 60 years.
Banks fell, with Barclays, Royal Bank of Scotland, HSBC, HBOS, Lloyds TSB and Standard Chartered losing 0.5 to 2.2 percent.
"The outlook for the UK economy over the next 12 month is pretty grim without a shadow of doubt. Whether it will be as bad as Darling said it could be is another matter," said Peter Dixon, UK economist at Commerzbank.
"Stocks are lower everywhere. We have got oil a little bit firmer ... We also had a pretty weak end to the day on Friday in the U.S. which is also driving everything lower. The whole outlook at the moment is the credit crunch, which is making its presence felt in the real economy and the equity market."
In Europe, Commerzbank agreed to buy Dresdner Bank from Allianz in a $14.5 billion (8 billion pounds) all-Germany deal that will break the country's banking mould and cost 9,000 jobs.
U.S. investment bank Lehman Brothers, meanwhile, has "intensified" talks with Korea Development Bank to raise as much as $6 billion in a share sale that could be concluded this week, the Sunday Telegraph reported.
On Friday, U.S. stocks tumbled, led by lower tech shares after computer maker Dell warned that companies worldwide are cutting back on technology spending. The U.S. market will be closed for a holiday on Monday.
In Asia, Japan's Nikkei .N225 lost 1.8 percent on Monday.
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