Stock markets worldwide came under pressure amid mounting fears over Greece and the latest bond market sell-off.
London’s FTSE 100 Index closed 1.3 per cent lower, down 91.22 points at 6,859.24, joining stock markets across Europe and the US in diving into the red, ahead of tomorrow’s repayment deadline for Greece.
Investors are growing increasingly anxious over the prospect of Greece running out of cash, with the eurozone country facing more debt repayments and no sign of a concrete deal yet.
Markets also responded to comments by the International Monetary Fund (IMF) in its annual review of the US economy that the Federal Reserve should wait until the first half of 2016 before raising interest rates because inflation remains too low. The IMF said there are “significant uncertainties as to the future resilience of economic growth”.
Alastair McCaig, market analyst at IG, said IMF head Christine Lagarde “might find her presence in Washington less than welcome following her decision to tell Fed Chair Janet Yellen what to do with her interest rate decisions”.
Royal Mail was one of the UK stocks in focus after Chancellor George Osborne announced plans to sell the Government’s remaining 30 per cent stake in the firm later this year.
The stake currently has a market value of around £1.5 billion, the treasury said Royal Mail shares fell 5 per cent, or 26p, to 500p.
Johnson Matthey was another big faller despite the chemicals and technology firm reporting a 22 per cemtrise in annual pre-tax profits to £495.8 million.
Investors were worried over Johnson’s rising debt pile and shares dropped 5 per cent, or 185p, to 3,331p.
In the FTSE 250, price comparison firm Moneysupermarket was hit after news that energy watchdog Ofgem was investigating whether to include it in a competition probe.