FTSE 100 holds steady as Greek debt talks continue

UK stocks held steady today as traders took to the sidelines as they awaited the outcome of talks between Greek Prime Minister Lucas Papademos and other leaders of the ruling coalition.

The FTSE 100 stood at 5,894 in early afternoon, up just four points from Tuesday’s close.

At today’s meeting, Papademos will try to convince the leaders of the New Democracy, Pasok and Laos parties to pass another round of austerity measures, which is a condition of the next €130 billion bailout from the EU and the IMF.

Papademos has already finalised the terms of the financial aid package with EU officials. The deal reportedly calls for a 20 percent reduction of wages and more layoffs in the public sector.

The widely unpopular austerity measures have triggered mass protests and the government may not survive April’s election if it opts for further budget cuts.

However, if no deal is in place and Greece misses out on more financial support from its official sector lenders – collectively known as the Troika – it will go into a default as soon as next month when it has to repay a €14.5 billion bond.

“What is more worrying for the long-term stability of Greece, and thus the Eurozone, was the latest poll from Athens which showed a dramatic drop in support for the political parties that support Papademos and the technocrats,” said analyst at forex.com Kathleen Brooks.

“This makes the upcoming April election even more critical as it could give power to extreme parties, which may only make Greece’s problems worse.”

In the meantime, the Wall Street Journal reported that the European Central Bank has agreed to exchange its Greek debt bought on the secondary market for bonds issue by Europe's bailout fund, the European Financial Stability Facility (EFSF).

Reckitt Benckiser (LON:RB., up 3.3pct at 3,492p) topped the FTSE 100 leaderboard after the maker of the Strepsils, Durex and Clerasil brands said its revenues growth will be ahead of the market in 2012.

Shares in part-nationalised banks Lloyds (LON:LLOY, up 2.3pct at 36.08p) and Royal Bank of Scotland (LON:RB., up 1.7pct at 29.37p) also were in demand as concerns over their exposure to the euro zone debt crisis eased.

Miners did well today, recovering from yesterday’s sell-off. Kazakhmys (LON:KAZ, up 1.9pct at 1,182p) led the sector, followed by Xstrata (LON:XTA, up 1.5pct at 1,218p) and Rio Tinto (LON:RIO, up 1.4pct at 3,923p).

Meanwhile, Sage Group (LON:SGE, down 3.4pct at 293.5p) was headed in the opposite direction as it went ex-dividend.

International Power (LON:IPR, down 3pct at 332.5p) also showed up among the heaviest fallers in the blue chip index after cautioning investors that it may miss its 2013 earnings target of €1 billion due to a decline in hydro prices in Brazil.

Other notable fallers included engineering group Weir (LON:WEIR, down 1.7pct at 2,015p) and clothing retailer Next (LON:NXT, down 1.7pct at 2,709p).