MID SESSION MARKET WRAP

The Mid Session Wrap is a report on the biggest movers in the FTSE 100 and macroeconomic news that impacts movements in share prices. The report also previews macroeconomic data that is due to be released over the course of the session.

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Monday, February 06, 2012

FTSE 100 slumps on Greece concerns

FTSE 100 slumps on Greece concerns

Jittery investors dumped riskier assets this morning, pushing the UK’s blue chip FTSE 100 index down 19 points (0.3 percent) to 5,884 in early afternoon.

The markets are currently focused on Greece, where the ruling coalition is trying to hammer out an agreement to impose further austerity measures in order to secure the much needed €130 billion bailout package from the so-called Troika comprising the EU, the IMF and the ECB.

Greece is under pressure from the EU to accept the terms of the new financial aid package, which include a series of painful reforms.

However, despite setting a deadline of Monday morning to respond to Europe's demands of further budget cuts, Prime Minister Lucas Papademos and other leaders of the ruling coalition have yet to come to an agreement.

“The Greece situation remains an unwelcome distraction to investors,” said chief market strategist at City Index Joshua Raymond.

“One of the key issues surrounding the situation is the fact that nothing seems easy to agree, whilst at the same time, the goalposts consistently appear to move.”

If Greece fails to secure more financial aid, it will likely go into default as soon as March as it is facing a March 20 deadline to pay off a €14.4 billion bond, which it will be unable to do without more help from its lenders.

Oil and gas major Cairn Energy (LON:CNE, up 3.5pct at 338.4p) led the FTSE 100, followed by gold miner Randgold Resources (LON:RRS, up 3.2pct at 7,640p), which today unveiled a strong set of quarterly results and doubled its annual dividend.

Shares in part-nationalised bank Lloyds (LON:LLOY, up 1.8pct at 35.01p) and hedge fund manager Man Group (LON:EMG, up 1.2pct at 138.4p) also were in demand this morning.

Meanwhile, today’s heaviest fallers included commodities trader Glencore (LON:GLEN, down 4pct at 463.35p) after a report in the Financial Times said it has agreed to pay a premium to secure a merger with Xstrata (LON:XTA, down 2.3pct at 1,254p).

Other mining companies including Vedanta Resources (LON:VED, down 3.8pct at 1,308p) and Antofagasta (LON:ANTO, down 1.9pct at 1,372p) also were in decline as base metal prices fell.


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