S&P sets sights on 131 blue-chips

By PATRICK HOSKING
Updated:

 

INVESTORS' gloom deepened today as debt rating agency Standard & Poor's revealed it had 131 major companies in its sights for possible downgrading. The warning came as the City enjoyed a much-needed stock market rally, although analysts were sceptical that it would last.

The FTSE 100 index jumped 159.4 points to 3446.4 in what analysts called a 'dead-cat bounce' after closing last night at its lowest for almost eight years.

European banks and insurers led S&P's list of vulnerable companies, with Legal & General and Swiss Re among 25 insurers and 35 banks.

Four insurers risk being downgraded to 'junk' - making their bonds unacceptable to many investors. Despite today's rally, traders said the Footsie could test the crucial 3000 barrier. That would severely stretch major financial institutions.

Ruth Kelly, Financial Secretary to the Treasury, acknowledged the shares turmoil was a problem for people with pensions and endowment mortgages, but insisted Britain's economy was sound.

WestLB jobs to go in shakeout

PRESSURE on share and bond prices has renewed fears that many thousands of City jobs are at risk. Between 100 and 150 equity trading and research and other jobs are going at WestLB Panmure after the investment bank announced plans to trim its midcap specialist roots. The German-owned bank employs 350 people in London. Chief executive Graham Cook is resigning.

Most watched Money videos