German short selling of bonds ban worries market - send dollar to four year high against euro

The FTSE 100 is currently down 128 points to 5,177 after a fall of 115 points to 10,511 last night on the DOW industrials as traders reacted negatively to the news that German authorities are banning naked shorting of certain financial instruments in the debt market.

The euro fell sharply to hit a four year low against the U.S. dollar of 1.21 versus a 52 week high of 1.51. The rise in the dollar sent commodity stocks sharply lower this morning with BHP down 5% to £18.35 and financials are also under pressure with the likes of Barclays down over 6% to £2.86. BP continued its slide down to hit £5.26, a fall of 1.5%. After announcing its rights issue on Monday to acquire the assets of AIG's Asian unit AIA, Prudential shares are down over 4% this morning to £5.09 as analysts still remain unconvinced about the deal.

The heavy fall in Ithaca Energy (IAE) to £1.53 on no news (down 15p, 9% today) has made it a buying opportunity and this has been added to the portfolio this morning. The volatility is Ithaca is amplified by its dual listing on the Toronto Stock Exchange (TSX) and the London Stock Exchange (LSE) which means that currency and trading in Canada have an impact on the U.K.price. WTI crude oil went below $70 yesterday (the lowest point this year).