Greek shock turns trading screens red

By Dominic Jeff
Published on Wednesday 2 November 2011 00:00

LONDON FTSE 100 CLOSE 5,421.57 -122.65

WORLD markets slumped yesterday amid fears that Greece could derail the eurozone rescue package and create havoc on financial markets.

The FTSE 100 index was down more than 2 per cent at 5,421.57 after the Greek prime minister announced a shock referendum on whether to accept a package of aid and budget cuts that forms a key part of the deal.

Will Hedden, sales trader at IG Index, said: “The continuing soap opera of the Greek debt crisis has bathed trading screens in red. European and US indices ‘record gains’ in October seem like a very distant memory now.”

Banks were among the biggest losers as Greece’s unexpected move cast fresh doubts on last week’s much-heralded proposals to protect Europe from collapsing into recession.

Barclays topped the fallers board, down 9 per cent or 18.6p at 176.8p. Royal Bank of Scotland was down 2p at 22.3p, and Lloyds was 1.9p lower at 30.6p.

The pound was up at €1.17 against the euro after the single currency was hit by the latest uncertainty, but lower at $1.60 against the “safe haven” dollar.

The Dax in Frankfurt and the Cac-40 in Paris were down 5 per cent and 5.4 per cent respectively, while the Dow Jones industrial average in New York was 2.5 per cent lower as the London market closed.

Elsewhere, the China Federation of Logistics and Purchasing said its monthly purchasing managers’ index fell an unexpectedly large 0.8 per cent to 50.4, just above the 50-level that signifies expansion.

The figures raised fears of a slowdown in Chinese demand and hit the FTSE 100’s miners, including copper producer Kazakhmys, which was down 66p at 861.5p.

Fears over the global economy also drove down the price of crude and affected Scotland’s oil companies. Bowleven was one of the worse affected, down 8.5p or 7.8 per cent at 100p, despite announcing plans to deepen its Sapele-3 exploration well off the coast of Cameroon.

Security group G4S edged higher after the company abandoned its audacious £5.2 billion takeover bid for Danish cleaning firm ISS. Shares were up 1p at 245.2p yesterday, after diving 20 per cent when the deal was revealed two weeks ago on fears that the acquisition was too big at a time of such economic uncertainty.

Imperial Tobacco shares were slightly ahead after the cigarette giant posted a rise in full-year profit on higher revenue, boosted by surging developing market demand and price hikes. Shares were up 1p at 2,275p.

Outside the top flight, gaming company Bwin Party Digital Entertainment jumped 10 per cent after it unveiled a joint venture with MGM Resorts International and Boyd Gaming to offer online poker in the US, pending regulatory approvals. Shares were 13.6p ahead at 123.3p.

Scottish insulation firm Superglass saw shares plunge by nearly 23 per cent as the market reacted to its statement on restructuring late on Monday.

The Stirling-based firm, which is struggling since an expected sales boost from a government scheme failed to materialise, said it will convert some of its £17.7 million debt mountain into shares and issue more equity to fund modernisation. The shares fell 0.63p to 2.13p.