FTSE slumps to three-month low

London’s blue chip index slumped to a three-month low today after being dogged by fresh fears that Greece would default on its debts.

EU finance ministers said they will not give Greece the latest €12bn instalment of its emergency loan until it agrees to tough austerity measures, raising uncertainty over its economic stability.

The FTSE 100 Index was down 21.6 points to 5693.4 but recovered from a fall of 67 points earlier in the session after European Union leaders said they were confident that Greece will avoid a default at a meeting in Luxembourg.

The London market was also boosted by a strong opening from the Dow Jones Industrial Average, which lifted 0.6%.

The pound was up against the dollar at 1.62 but was down against the euro, at 1.13, after the single currency rebounded on increasing optimism about the situation in Greece.

Banking stocks were among the biggest losers from the eurozone debt worries. Royal Bank of Scotland topped the fallers board, after employees cashed out a swathe of stock awarded for bonuses. Shares were down 4%, or 1.8p at 38.5p.

Lloyds Banking Group dropped 1.2p to 47.2p after concerns over its exposure to the Greek crisis combined with fears that a strategy review at the end of the month would see new boss Antonio Horta-Osorio provide a gloomy update. Barclays eased 4.7p to 252.6p.

However, mining stocks clawed back some of their earlier losses on the back of the more hopeful news about the Eurozone debt crisis. Copper miner Kazakhmys, which had been down 33p at noon, closed down 14p at 1247p.

Aggreko, the company supplying power for next year’s London’s Olympics, was among the top fallers despite revealing that underlying revenues have risen by 9% so far this year, while underlying profits were 17% higher.

The stock has been under pressure recently after Hugh Osmond, the financier who floated Pizza Express, bought US rival APR Energy, raising the threat of more competition. Shares fell 37p to 1874p.

Outside the top flight, shares in Cable & Wireless Worldwide jumped 3% after the Financial Times reported that the company was looking at retrenching to Britain by selling most of its international assets. With Hong Kong-based Pacnet reportedly keen on the overseas businesses, shares were 1.6p higher at 49p.

Meanwhile, a strategy update from Superdry fashion owner SuperGroup failed to win over investors as shares slumped 4%, or 37p to 863p.

The retailer, which reported an improvement in trading over the past three weeks, said plans to more than double internet sales and open 20 new stores in the UK over the next year were on track. Its shares have now nearly halved in value in recent months.

The biggest Footsie risers were Inmarsat up 26p at 590.5p, International Consolidated Airlines Group ahead 4.9p at 237.4p, Vodafone up 2.7p at 162.3p, and Eurasian Natural Resources 10.5p to 726.5p.

The biggest Footsie fallers were Royal Bank of Scotland down 1.8p at 38.5p, Man Group off 8.3p at 221.5p, Schroders down 39p at 1244p, and Hargreaves Lansdown off 18p at 596p.