Markets suffered further falls today after Greece failed to patch together a coalition government, triggering another election next month.
The FTSE 100 Index fell 27.9 points at 5437.6, building on its 2% slide yesterday, as Greek president Karolos Papoulias said a caretaker government will be formed tomorrow, with another election expected in the middle of June.
The new ballot is forecast to lead to an anti-austerity party increasing its share of the vote, heightening fears that Greece will default on its debts and face ejection from the eurozone.
The worries over Greece saw London’s leading shares index reverse earlier gains, driven by a surprise 0.5% growth in Germany’s first quarter GDP, which kept the eurozone out of recession by the slimmest of margins.
Germany’s Dax and France’s Cac-40 were both down more than 0.5% while the Dow Jones Industrial Average was slightly ahead as the London market closed, boosted by strong US manufacturing data.
The pound was slightly up against the euro at a three-year high of 1.25 as the single currency was hit by fears over the future of Greece. But sterling was down against the dollar at 1.60 despite figures showing the UK’s trade deficit shrank slightly in March.
In London, heavily weighted miners and financial stocks remained unsettled with Vedanta Resources down 40p to 1013p, Royal Bank of Scotland off 0.5p at 21.3p, and Barclays 3.7p lower at 186.1p.
Insurer Aviva, which is due to publish an update later this week, was down nearly 3%, or 8.3p at 282.4p.
In today’s corporate news, security services group G4S was among the biggest risers in after it reported first quarter revenues growth of 7.5%, helped by its contract to provide thousands of staff for this summer’s Olympics.
Shares were 8.4p higher at 275.2p as G4S also said that profits for the period were in line with a year earlier.
The biggest Footsie risers were Carnival ahead 67p at 2034p, G4S up 8.4p at 275.2p, Polymetal International up 14p at 808.5p, and Smiths Group ahead 15p at 1041p.
The biggest Footsie fallers were International Consolidated Airlines down 9.5p at 149.9p, Kazakhmys off 30p at 707p, Vedanta Resources down 40p at 1013p, and Man Group off 3.2p at 79.9p.