Britain's top share index is expected to register a drop of nearly 11 percent on the year as investors focus on the eurozone debt situation and its potential to wreak havoc on the financial system. Median forecasts of 22 equity strategists from a survey taken in the last 10 days indicated the FTSE 100 would trade at 5,275 by end-2011, having closed at 5,217 on Wednesday. The index started the year at 5,899.
A smaller sample of 20 saw the index reaching 5,550 by mid-2012 - a 6.4 percent advance from the close on Wednesday. The results were lower than a poll in June which showed the FTSE ending 2011 at 6,150 and reaching 6,300 in mid-2012.
"I would say that there is potential for upside on the FTSE, but I think the likelihood of any economic growth has been stunted severely by what's happening in the eurozone," Martin Dobson, head of trading at Westhouse Securities, said. "There's so much talk now (of) going into a double-dip recession I think it is fairly inevitable that the next six months/nine months are going to be very difficult for any growth to be material."
The median probability of a second recession in the United States, eurozone and Britain has climbed to roughly one in three, Reuters polls showed.
Miners, whose performance is closely correlated to global growth, stand to suffer particularly from a slowdown and the sector, heavily weighted on the UK blue chip index, has fallen about a third this year. The FTSE 100 is down over 11 percent on the year, having gained 9 percent in 2010.
The index sank about 7 percent in August, its biggest monthly fall since February 2009, partly on fears of a repeat of the 2008 credit crunch, given banks' exposure to the eurozone's weaker economies, such as Greece, Italy, Spain and Portugal.
The FTSE 100 trades on a one-year forward price-to-earnings ratio of 8.7 times, against a 10-year average of 14 times, Thomson Reuters Datastream data showed.