World markets slump on further bad news from Greece

Greece’s debt turmoil and disappointment over earnings from mobile phone handset giant Nokia triggered a slump for world markets today.

The FTSE 100 Index dropped 62.2 points to 5661.6 while the Dow Jones Industrial Average opened more than 1% lower in New York.

Miners and financial stocks were at the forefront of the sell-off as economic confidence suffered in the wake of the latest bad news from Greece.

European statistics agency Eurostat reported the country’s budget deficit in 2009 was 13.6% of gross domestic product, instead of the previously predicted 12.9%, while the ratio of government debt to GDP stood at 115.1%, the second highest in the EU after Italy.

The agency also expressed “a reservation on the quality of the data reported by Greece,” and warned the 2009 figures could be revised further.

The Greece fears saw the euro take a further hit, with the pound up to levels not seen since February against the single currency.

Meanwhile, Ireland had the biggest government deficit in the EU last year, due to the €4bn injection into Anglo Irish Bank.

Our debt ratio had shown as 11.8% of GDP, but has now risen to 14.3% for 2009.

News from the corporate results season also weighed on sentiment, even though Nokia’s first-quarter net profit surged on the back of smart phone sales and 3% growth in total revenues.

Nokia’s share price plunged 14% in Helsinki as traders had expected a better performance and a more upbeat forecast.

Indications of weak crude demand in the US also sent oil prices lower to around $83 a barrel.

In London, oil and commodities firms littered the fallers board, while financial firms also suffered due to economic fears, with Prudential down 18.5p to 546p and Aviva 13.3p lower at 372.4p.

British Airways was also down 7.7p at 225.8p as airline losses remain in the spotlight following the closure of European airspace as a result of the Icelandic volcanic eruption.

The sell-off wrecked earlier gains in the FTSE 250 Index, with gaming firm Rank down 0.7p to 117.2p after initially rising by more than 5% in the wake of a well-received trading update.

Rank had been lifted by the success of its new-look Grosvenor Casino business, while its Mecca bingo arm also posted a resilient performance. Shares were later down 0.7p to 117.2p.

Persimmon was 11p higher at 479.7p after its trading statement showed sales volumes have remained consistent despite the backdrop of continued election uncertainty. Rival firm Taylor Wimpey benefited, adding 0.9p to 40p.

Sports World retailer Sports Direct International declined more than 3% despite posting sales growth of nearly 3% and said it remained on course to meet its recently improved full-year earnings target. Shares were 3.3p lower at 104.7p.