Inconclusive UK election result adds to market nervousness

07 May 2010 11:19  [Source: ICIS news]

LONDON (ICIS news)--An expected inconclusive UK election result added to nervousness in global financial markets on Friday.

The UK’s FTSE 100 index of leading shares on the London market was down close to 1.1% at 09:34 GMT. It had slumped close to 2% in early trading following an election night that pointed to no clear winner among the country’s major political parties and a ‘hung parliament’.

Japan’s Nikkei index closed 3.1% down on Friday as global markets reacted to the implications of the Greek debt crisis. A lack of confidence in the willingness of the European Central Bank (ECB) to step in to help stem the knock-on effect of the crisis added to general market nervousness.

The ECB on Thursday held eurozone interest rates at 1% for the 12th consecutive month and suggested the Greek debt crisis would be contained. Debt rating agency Moody’s warned, however, that the debt contagion could spread to Portugal, Spain, Italy, Ireland and the UK.

Wall Street reaction to the debt problems was swift. The Dow closed down by 3.2% (347.80) on Thursday after partially recovering from a massive 1,000-point dive.

The UK chemical industry would seek long-term strategic support for manufacturing and its supply chains from a new government, the country’s Chemical Industries Association (CIA) said on Thursday.

It would be asking a new government to implement as soon as possible suggestions made by the industry in a manifesto published in March, it said.

In its manifesto, the CIA called for a for a phased reduction in UK corporation tax to 25% by 2015 and 20% by 2019 and a more competitive tax regime to incentivise research and development. It also called for an increase in the country’s annual investment allowance to stimulate investment in capital-intensive industries.

($1 = €0.79)

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By: Nigel Davis
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