TUESDAY MARKET CLOSE: Greek woes send Footsie lower

London’s benchmark share index failed to hold on to gains as the European Union slashed its growth forecast for Greece from 2.5 per cent to a mere 0.5 per cent.

A rise in the price of oil hit British Airways owner International Airlines Group. Picture: PA

Investors were spooked by the update amid efforts by the debt-laden country to negotiate access to much needed bail-out cash and avoid a potentially destabilising exit from the eurozone.

Traders returning to their desks after the Bank Holiday weekend had pushed London’s top-flight above the 7,000-mark in the first half of the session but it ended the day 58.37 points or almost 1 per cent lower at 6,927.58.

Chris Beauchamp, senior market analyst at IG, said: “The day has seen the FTSE 100 fail to keep its gains, which can be partly attributed to the nearness of the UK election, but the real culprit lies over in the eurozone, where the familiar spectre of Greece has caused markets on the continent to move into reverse.”

HSBC dominated the corporate limelight after it reported a better-than-expected 4 per cent rise in pre-tax profits for the first quarter. Chief executive Stuart Gulliver said the group had “recovered well” after a tough end to 2014.

But the stock fell 20.4p to 625.9p. Shore Capital banking analyst Gary Greenwood said it was surprising to see the group’s shares fall as the Q1 results were comfortably ahead of City forecasts.

Elsewhere in the sector, Lloyds had been boosted earlier in the session by an upgrade from Jefferies with a Royal Bank of Scotland also climbing, after a positive note from Nomura. But both headed lower amid the wider gloom later.

Lloyds closed 0.5p lower at 82.4p while Royal Bank of Scotland slipped 4.5p to 335.3p. Barclays shed 4.2p to 250.2p.

A rise in the price of oil helped British Airways owner International Airlines Group end as the session’s biggest top-flight faller. It dropped nearly 4 per cent, or 20.5p, to 537p.