FTSE down 2% amid Greek default fears

The London market slumped 2% today as the increasing likelihood of a Greek debt default shook investor confidence.

FTSE down 2% amid Greek default fears

The London market slumped 2% today as the increasing likelihood of a Greek debt default shook investor confidence.

The FTSE 100 Index closed 108.9 points lower at 5259.6 after European finance ministers pushed back a decision on releasing further bailout funds to recession-hit Greece.

Britain's banking stocks were among the biggest casualties, as the intensifying crisis showed no signs of easing.

EU finance leaders want Greece to make further progress with its deficit reduction plans before they decide if it can be granted its next loan instalment of €8bn.

Meanwhile, investors were nervously awaiting the outcome of this week's US Federal Reserve meeting, with some analysts expecting further emergency support for the country's lagging recovery.

In Germany, the Dax was down by 2.8% after a regional election defeat for Angela Merkel's government added to the market uncertainty.

The pound was up against the euro at 1.14 as the escalating crisis weakened the outlook for the single currency. The pound was down against the dollar at 1.56.

London's top flight was driven lower by banking stocks as Royal Bank of Scotland slipped 1.4p to 22.9p and Barclays fell 10.7p to 152.7p.

There was additional pressure on Lloyds Banking Group after it announced the departure of finance director Tim Tookey following three years in the role. Its shares declined 7%, or 2.4p, to 33.4p.

Global growth fears also hit metal and oil prices, with copper dropping 2% to its lowest level this year and leading to a slide in commodity-based shares.

Kazakhmys was down 7%, or 75p, at 977p and copper miner Antofagasta slipped 106p to 1194p, but the continued safe haven of gold meant Randgold Resources was 110p higher at 7065p.

Outside the top flight, Ocado shares remained under pressure after the online grocer said margin growth was being squeezed by ongoing efforts to stem a recent decline in customer service standards.

The update did little for confidence in the firm, which floated on the stock market in July 2010 at 180p per share but has seen its price drop as low as 106p amid doubts it can compete with supermarket home delivery services. Shares were down 11%, or 15.3p, at 118.4p today.

French Connection shares declined after retail operating losses increased 95% to £3.7m (€4.25m) in the UK and Europe due to rising costs and as it sold more of its stock in the summer sale.

Overall half-year profits rose to £700,000 (€804,438) and chief executive and chairman Stephen Marks said the group was "firmly back on a growth path" and was in a good position to expand overseas.

Shares were down 11.8p to 91.3p, having been higher in the run-up to the results.

The biggest Footsie risers were Randgold Resources up 110p at 7065p, National Grid ahead 5.5p at 626p, Imperial Tobacco up 12p at 2038p and GlaxoSmithKline ahead 5p at 1305p.

The biggest Footsie fallers were Antofagasta down 106p at 1194p, Kazakhmys off 75p at 977p, Xstrata down 70.5p at 970.5p and Lloyds Banking Group off 2.4p at 33.4p.

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