Blue-chips suffer amid Greek woes

Commodity and banking stocks dragged the FTSE 100 index below the 6,000-level yesterday as Greece's debt problems and uncertainty over global economic growth hurt sentiment.

London's blue-chips closed down 42.89 points, or 0.7 per cent, at 5,976, having hit a one-week closing high on Tuesday.

Oil prices in New York tumbled 4 per cent to just under $100 at one point over concerns that floods in Mississippi could shut refineries.

Atif Latif, director of trading at Guardian Stockbrokers, said: "Most of the weakness is based on selling on the back of more fiscal tightening expected in China, coupled with chatter around Greece, in particular that there is till no consistent message coming through from European Union officials."

Bank of England deputy governor Charles Bean warned of the potential for messy consequences from the eurozone debt crisis that is currently centred around Greece. He also said commodity price volatility was very much on the radar of the G20, as the Bank of England raised its medium-term inflation forecast.

The US trade deficit widened more than expected in March, which may prompt analysts to trim estimates of already weak first-quarter economic growth. But the Bank of England's prediction of an interest rate rise in the third quarter helped boost sterling, which was up at €1.14 and $1.64.

Sainsbury's delivered solid full-year profits of 665 million, an increase of 9 per cent, which saw its shares rise 1.3p to 357.1p. This was despite chief executive Justin King's warning that he expected another challenging year.

Marks & Spencer was also up nearly 1 per cent, or 3.3p to 399.2p, after JP Morgan Cazenove raised its target price to 460p and said the firm's proactive pricing strategy was reaping rewards in the tough climate.

But Morrisons shares slumped after the company went ex-dividend, meaning new investors will no longer be eligible for a payment. Shares dropped 5.5p to 301.7p.

Meanwhile, Scottish Gas-owner Centrica was boosted by chatter that the Qatari Investment Authority may be eyeing a buy-out, helping shares to jump 3p to 311.7p.

Aim-quoted Bowleven closed up 9.9 per cent or 28.25p at 313p after the Edinburgh-based explorer said it had found oil or gas in a test well off Cameroon.

But Aberdeen-based energy services heavyweight Wood Group went in the opposite direction, down 5p at 675p, after chairman Sir Ian Wood warned at the firm's AGM that there was the potential for a slowdown in clients' investment in the North Sea following the Chancellor's announcement of a tax hike.

Broadcaster ITV sank to the bottom of the index after it reported an 11 per cent rise in first-quarter revenues but warned it may under-perform the market due to comparisons with a strong period last year.ITV was down 4p at 71.9p, a fall of 5 per cent.

HSBC was under pressure after it put its US branch network and credit cards business under review as part of a cost-cutting plan. The group said it will exit Russia and focus on wealth management and retail banking in newer markets such as Mexico, Brazil and Turkey. Shares were down 10.1p to 646.1p.