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FTSE 100 drops on EU, US debt jitters

Published: 15:00 12 Jul 2011 BST

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The FTSE 100 was in decline this morning, slipping 43 points (0.75 percent) by midday as persisting concerns over Europe’s fiscal problems reduced appetite for riskier stocks.

The prospect of a Greek default looks as realistic as ever after top euro zone officials admitted that Greece may have to write off its debts following yesterday’s emergency talks.

In addition to that, speculation that the US may fail to raise its US$14.3 trillion debt ceiling by the 2 August deadline, which would make it harder for the world's largest economy to service its debts, put further pressure on equity markets.

Chipmaker ARM Holdings (LON:ARM) was the heaviest faller in the FTSE 100, sliding 5 percent to 597 pence on a profit warning from its US peer Microchip Technology.

Shares in builders’ merchant Wolseley (LON:WOS), which operates in the US, fell 3 percent to 1,915 pence by mid afternoon on jitters over the US debt situation.

US equities are tipped for a lower open when trading kicks off on Wall Street today. Futures for the Dow Jones Industrial Average (DJIA) dropped 76 points (0.6 percent) in pre-market trade in New York, while futures for the broader S&P 500 index slipped 12 points (0.9 percent).

Shares in Carnival Corp (NYSE:CCL) were down 2.7 percent in pre-market in the US.

Schlumberger (NYSE:SLB) was down 2 percent. Ford (NYSE:F), Freeport Mcmoran (NYSE:FCX) and Bank of America (NYSE:BAC) all lost about 1.5 percent in pre-market.

Asian markets took cues from US stocks today. Japan’s benchmark Nikkei 225 index dropped 143.5 points (1.45 percent) to close at 9,925, while China’s Shanghai Composite Index slipped 48 points (1.7 percent) to end today’s session at 2,754.

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