FTSE further hit by Greek crisis

London’s FTSE 100 Index took further damage today as the global sell-off sparked by fears of an imminent Greek default continued unabated.

The Footsie was 34.7 points down at 5568.8 following a 2.6% fall on Tuesday - its biggest one-day slump in almost six months.

The top-flight followed Asian markets down overnight, with Japan’s Nikkei down 2.6% and the Hang Seng in Hong Kong off 1.5%.

Wall Street’s Dow Jones Industrial Average was also set for further declines today after losing 1.9% in a torrid session yesterday.

Ratings agency Standard & Poor’s slashed Greece’s sovereign debt to junk status, and sparked worries over contagion by downgrading Portugal due to the “amplified risk” faced by its own economy.

IG Index analyst Anthony Grech said: “Jittery investors are concerned that the instability in the markets could snowball into something much bigger.”

Dealing rooms will hope for some positive signals from a meeting today between German Chancellor Angela Merkel and the heads of the International Monetary Fund and the European Central Bank.

But London stocks saw another broad-based sell-off after yesterday’s plunge which left just two blue-chips in positive territory.

Financial stocks came under more pressure amid worries over their exposure to Greek sovereign debt, with Royal Bank of Scotland off 1.6p to 54.5p, Lloyds Banking Group 1.9p lower at 66.3p and Barclays 7.7p cheaper at 349.5p.

Engineering giant Rolls-Royce was also down 15p to 575p after a trading update which said first half sales and profits would be flat compared with 2009. The group said the Iceland volcano disruption had put additional pressure on its European aviation customers.

Meanwhile a number of top-flight stocks turned ex-dividend, meaning shareholders do not qualify for the latest payout. Publisher Reed Elsevier and British Gas parent Centrica were the Footsie’s two biggest fallers, losing 20p to 510p and 11.2p to 300p respectively.

Argos owner Home Retail Group was meanwhile down 4.8p to 276.2p or 2% amid worries from brokers at Arden Partners over increased competition from Wal-Mart’s Asda as well as other electrical retailers.

In corporate news Royal Dutch Shell announced a 49% surge in first quarter profits, to $4.9bn (€3.7bn).

The firm, along with rival BP, has benefited from higher oil prices. Shell shares rose 52.5p to 1974.5p, while BP added 11.5p to 621.5p.

In the FTSE 250, ports operator Forth Ports added 55p to 1298p after it rejected the latest takeover proposal from a consortium of suitors.