FTSE close: Banks lower; Glencore up

 

17.20 (close)

Dealers monitor their screens on the trading floor of IG Index in London

Market watcher: Shares are predicted to fall.

London's top flight index fell today on renewed fears that Greece could default on its debts, although stronger economic data from the US helped it recover some of its earlier losses.

The FTSE 100 Index sunk to near a two-and-a-half month low after shedding almost 100 points following reports that the situation in Greece could cause a continent-wide debt crisis.

But it had regained some of those losses by the close, leaving it down 43.7 points at 5,698.8, after the Dow Jones Industrial Average made gains of 0.6%, buoyed by better than expected unemployment and construction data.

The mood of investors was also slightly improved in the afternoon by comments from Olli Rehn, the EU's monetary affairs commissioner, that Greece would likely get its next instalment of 12bn euros (£10.6bn) from the rescue package agreed last year.

The eurozone crisis saw the single currency plunge against all major currencies, and was at 1.14 against the pound. Sterling dropped to 1.61 against the US currency.

On the stock market, concern over Greece's plight was most keenly felt across the heavyweight banking and commodity sectors.

Chancellor George Osborne's speech last night that confirmed plans to ringfence investment banking and high street operations added to the sector's unease.

Barclays fell 3.4p to 254p and Royal Bank of Scotland dropped 0.5p to 40.3p.

The retail sector came under pressure after official figures revealed a worst-than-expected 1.4% slump in sales volumes in May.

A hangover from the previous month's royal wedding, Easter and run of bank holidays hit the industry, with food stores registering the first decline in volumes for 14 months.

Blue-chip retailers fell, with Next down 36p at 2196p and B&Q parent Kingfisher dropping 4.1p at 268p.

Commodities trader Glencore perked up near the end of the session to add 2.8p to 475.8p having been much lower earlier in the day, though it still remains well below its 530p flotation price.

The company has been under pressure this week when it rejected speculation of a potential takeover of miner Eurasian Natural Resources Corporation (ENRC).

The eurozone woes fuelled further concerns over the wider global recovery, which saw the mining sector come under pressure.

Copper giant Kazakhmys led the sector, down 42p at 1240p, with platinum group Lonmin off 49p at 1382p and ENRC slipping 21p to 723p.

Outside the top flight, luxury handbags maker Mulberry posted one of London's best performances as it continued to defy the economic downturn with a sharp jump in annual profits.

Shares, which peaked at around 1628p last month compared with 200p a year ago, were 9% or 115p higher at 1450p today.

The biggest FTSE 100 risers were Lloyds banking Group up 0.3 to 48p, Capita ahead 5p at 744.5p, Glencore up 2.8p at 475.8p and Sainsbury ahead 1.1p at 324.7p.

The biggest fallers were Lonmin down 49p at 1382p, Kazakhmys off 42p at 1240p, GKN down 6.4p at 202.1p and Autonomy off 52p at 1694p.

15.55: The FTSE 100 is 45.9 points lower at 5,696.6 as the end of the session approaches.

After an early wobble the Dow is now on a firmer footing, up 66.4 points at 11,963.6.

15.15:

The Dow Jones is volatile following worse than expected manufacturing data but upbeat US housing and jobless figures.

It dipped into the red earlier but has moved back into positive territory, up 24.5 points at 11,921.8.

In London the FTSE 100 is off earlier lows, but it remains down 58.7 points at 5,683.9.

We have an update on support services group WS Atkins, which has managed to counteract faltering UK profits with a strong performance overseas.

The Epsom-based firm saw UK operating profits slide to £61.4m in the year to March 31, from £77.3m the year before, as it contended with public spending cuts.

Its shares are down 25.5p at 779.5p.

13.30:

The London market hit a two-and-a-half month low today as fears over political and economic chaos in Greece shook traders' confidence.

It's down 93.1 points at 5,649.4.

Stock futures are also pointing to a lower open on the Dow Jones later.

As well as concerns about Greece, US investors are nervously awaiting jobless, housing and current account figures.

Brent crude is trading at around $112.50 a barrel. Gold was fixed this morning at $1,525 an ounce compared with $1,529.75 dollars at the previous close.

11.50:

We have more on the dismal retail sales figures for May.

A 1.4% slump last month more than wiped out gains in feel-good April and increased the likelihood that an interest rate rise will be postponed.

The FTSE 100 is 63.1 points lower at 5,679.4.

11.30:

Here's a little more on the warning given by the European Central Bank on Greece that has sent global markets south today.

Nout Wellink, a member of the European Central Bank's Governing Council, warned that the EU bailout fund would have to double to £1.3 trillion if Greece fails to pay its debts and spreads financial turmoil to other countries.

The warning came as Greek prime minister George Papandreou prepares to reshuffle his government in an attempt to get austerity measures through parliament.

Germany's DAX has dropped 0.8% and the CAC-40 in France slumped 1.5% after the news. The FTSE is 77.51 points lower at 5665.04.

The euro fell in value after the warning. The single currency hit a three-week low against the dollar and was weaker against sterling, with the pound rising to €1.1414 compared to €1.1404 at the previous close.

11.15:

The FTSE 100 is suffering today, currently 65.5 points lower at 5677.03.

The latest blow to sentiment came from dismal retail sales figures which showed a 1.4% drop in sales in May as the boost from the Royal Wedding and Easter holiday, which had helped the previous month's figures, fell away.

Check back for more detail.

09.45:

The FTSE 100 is lower today with banks still suffering after plans to ring-fence their investment arms weree announced, while Glencore also retreated.

With Chancellor George Osborne last night confirming plans to ringfence investment banking and high street operations, Barclays fell 2.9p to 254.85p and Royal Bank of Scotland dropped 0.1p to 40.7p.

Commodities trader Glencore suffered another dismal session, falling another 12.3p to 460.8p as it moved further away from its 530p flotation price.

Greece's dire financial plight has continued to rattle investors as world markets sustained further heavy losses today.

With politicians apparently deadlocked over what steps to take next, the possibility that Greece will default on its debt has fuelled fears of a domino effect on other sovereign debt markets.

The nerves were felt across the heavyweight banking and commodity sectors as the FTSE 100 Index slipped 27.88 points to 5715.73.

Asian markets finished nearly 2% lower, while the Dow Jones Industrial Average registered a fall of 1.5% after investors in New York also digested disappointing economic data.

One of London's best performances came from luxury handbags firm Mulberry, which continued to defy the economic downturn by posting a sharp jump in annual profits and a strong start to its new financial year.

Shares, which peaked at around 1628p last month compared with 200p a year ago, were 9% or 114.5p higher at 1449.5p today.

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