Greece fallout fears weigh on FTSE

LONDON'S top share index joined stock markets globally in tumbling deep into the red yesterday as the Greek bailout failed to ease investor fears.

The Footsie fell 2.6 per cent, down 142.18 points to 5,411.11, while indices across Europe also plunged – by as much as 3.6 per cent on the Cac 40 in France.

America's Dow Jones Industrial Average dropped by 2 per cent in early trading, falling below the 11,000 mark amid concerns that the 110 billion (95bn) Greek rescue will not be enough and turmoil will spread to other European countries.

James Hughes, an analyst at CMC Markets, said: "With mining and commodities under such pressure and the troubles from Greece and continental Europe still causing problems, the last thing we could say that this market needs this week is the biggest election in 20 years.

"However, with Portugal and Spain both denying there is a bailout planned for them, it could be that the market has bigger fish to fry than an election." The euro fell to a year low against the dollar as worries lingered over the Greek fall-out on the eurozone. The pound strengthened to 1.16 against the single currency but fell to $1.51 against the safe-haven dollar.

Meanwhile, concerns over the impact of the Gulf of Mexico oil spill inflicted more damage on BP shares, and news of Australian tax hikes on mining projects hit that sector.

BP – which has just begun work on a new well to seal off the leak – saw its shares tumble 17p, or 3 per cent, to 558.5p. The drilling is likely to take some three months. The spill is costing it around $6 million a day.

The oil giant was joined on the fallers board by a host of miners on news of a new 40 per cent super-tax from the Australian government, as well as fears over a slowdown in China.

Eurasian Natural Resources was the biggest casualty, with shares down more than 11 per cent, or 139p, to 1,087p.

British Airways was another casualty after the return of the volcanic ash cloud from Iceland, which closed airspace over Ireland and parts of Scotland for part of yesterday. Shares in the airline fell 12p to 216.3p.

Security firm G4S gained ground on a slow day for corporate news, although its advance was stifled by the wider market sell-off. Shares in G4S were up 3.6p to 271p as it reported a "robust" first quarter.

Other firms on the front foot included blue-chip software company Sage, which added 0.6p to 245.8p ahead of first-half results this morning, which are expected to show a 4 per cent rise in profits. Morgan Stanley raised its target price on the company ahead of the figures.

Meanwhile, Asian-facing bank Standard Chartered edged 21p lower to 1,736p, shedding earlier gains amid a "very strong" start to 2010 and profits ahead of last year.

But in the FTSE 250, news of a sharp slowdown in net mortgage lending weighed on several housebuilders amid worries over loan availability. Among the fallers were Persimmon, off 18.6p to 457.7p.

Also in the second tier, Aberdeen Asset Management rose 5.4p, or 4 per cent, to 143.4p after reporting underlying profits of 92.6m in the six months to 31 March – almost treble the figure from the previous year.