Marcus Evans Group | Worldwide Headquarters | American Offices | Latin America | European Offices | African / Asian Offices

FTSE closes lower; financial and resource stocks down

Nervousness over Greece drags down European shares, with financial and resource stocks particularly hard hit

The FTSE 100 index in London has finished the day 62.36 points lower at 5671.09, a 1.09% fall. Market nervousness is increasing over Greece, which is teetering on the brink of a debt default after talks with creditors over a crucial debt restructuring stalled – yet again – over the weekend. Germany’s Dax and France’s CAC closed down 1% and 1.6% respectively.

Michael Hewson, market analyst at CMC Markets, said:

If today’s moves in European markets signal anything, they signal a lack of confidence in European leaders to deliver on what investors had hoped last week would be some form of progress with respect to a Greek debt deal, over the weekend.

Having seen markets hold on to the gains from the previous two weeks on the back of EU officials promises that a deal was close; the lack of any progress over the weekend has seen the markets deliver its verdict and it’s rather damning, with the FTSE hitting its lowest levels in nearly two weeks.

Friction between Germany and Greece over increased budget oversight hasn’t helped sentiment either.

EU leaders gathered at a summit in Brussels have just agreed on a permanent ESM bailout mechanism to come into effect from July but will sign a treaty at a later stage, Reuters reported.

Financial stocks have borne the brunt of today’s falls, with French banks being hit particularly hard after news that France will be implementing a unilateral transaction tax by the third quarter of this year.

UK banks are also lower with Lloyds Banking Group, Barclays and Royal Bank of Scotland at the bottom of Britain’s bluechip index. Lloyds slipped 1.3p, or 4.1%, to 31p while Barclays lost 9.3p, or 4.2%, to 213.5p and RBS shed 0.98p, or 3.5%, to 26.76p.

Resource and mining stocks have also slid as investors took profits on the gains seen so far on what has been a fairly positive month for European markets.

Defensive stocks were top of the pack today, with pharmaceutical and utility stocks outperforming the rest of the FTSE, led by AstraZeneca, International Power, GlaxoSmithKline and National Grid. AstraZeneca closed up 19p, or 0.6%, at £30.55; International Power climbed 2p, or 0.6%, to 332p; GSK added 7p, or 0.5%, to £14.37 and National Grid ended the day 3p higher, a 0.5% rise, at 613.5p.

On the FTSE 250, gambling and casino group Rank was the star performer, up 4.1p, or 3.2%, at 131.1p, after the City welcomed its attempts to engineer a merger with Gala Coral‘s casino arm. This would make Rank Britain’s biggest casino operator. © 2012 Guardian News and Media Limited or its affiliated companies. All rights reserved. | Use of this content is subject to our Terms & Conditions | More Feeds