Uncertainty sees decline for FTSE

The ongoing eurozone debt crisis continued to spook investors today with the FTSE 100 Index starting the new quarter on the backfoot.

Uncertainty sees decline for FTSE

The ongoing eurozone debt crisis continued to spook investors today with the FTSE 100 Index starting the new quarter on the backfoot.

London's leading shares index closed 1% or 52.98 points lower at 5075.5 after Greece revealed it would not hit its deficit targets for the next two years - making the prospect of a debt default more likely.

The country will miss the targets - agreed with the so-called troika, who are in Athens to discuss releasing the country's next bailout instalment - as its floundering economy failed to deliver the tax income needed.

The weak session comes after the FTSE 100 closed its worst quarter since 2002 on Friday - falling 14% and losing £212bn (€247.3bn) of its value.

The poor sentiment was further weighed down by claims that finance ministers from France and Belgium were meeting to discuss ways to bolster the balance sheet of Belgian lender Dexia.

The situation reignited fears of a second banking crisis and prompted more falls for UK banking stocks, including Standard Chartered, down more than 4% or 57.5p to 1229.5p, Royal Bank of Scotland off 1p at 22.5p and Lloyds Banking Group which lost 1.4p to 33.4p.

The debt crisis weighed on the euro, which was down against the pound at 1.16. However, sterling was off against a stronger dollar at 1.54.

The only note of encouragement came from the manufacturing sector after monthly purchasing manager surveys from both sides of the Atlantic came in better than expected.

While the UK report showed growth for the first time in three months, export orders hit a 28-month low as trade with the eurozone weakened.

The deepening sovereign debt crisis increased fears over a wider global recession and, following disappointing data on China last week, mining stocks continued to drop.

A global downturn would hit demand for raw materials, so the likes of Vedanta Resources dropped 8% or 91p to 1010p and Xstrata slipped 29.9p at 790.9p.

Gold prices surged nearly 2% to 1648.7 US dollars an ounce on the back of the uncertain outlook, which in turn saw Randgold Resources hit the top of the FTSE 100 risers' board, adding 230p to 6520p.

Luxury goods group Burberry was one of the heaviest fallers in the FTSE 100 Index, dropping by 82p to 1092p, amid fears about slowing demand in its key Asia market.

Outside the top flight, shares in stockbroker Charles Stanley fell 9% or 23.4p to 245p after it warned the impact of recent financial turbulence would leave half-year profits lower than a year ago.

The group said overall revenues will be similar to the £59.7m (€69.64m) seen in last year's first half, though interim profits will be below the £7.3m (€8.51m) reported a year ago.

The biggest Footsie risers were Randgold Resources up 230p at 6520p, Sainsbury's ahead 6.3p at 281.1p, Reckitt Benckiser up 57p at 3330p and International Power ahead 4.4p at 311.2p.

The biggest Footsie fallers were Vedanta Resources down 91p at 1010p, Burberry off 82p at 1092p, Cairn Energy down 15.7p at 265p and Aviva off 16.8p at 288.6p.

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