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FTSE flounders as Greece talks stall
Eurozone ministers and private bondholders fail to reach an agreement on Greek debt; Cairn Energy drops £2.5 million award for chairman.
Markets slumped on Tuesday morning following the news that Greek debt talks have fallen apart overnight.
The benchmark UK index of blue-chip shares fell 0.57%, or 33 points, to 5,749 and the Mid-250 index dropped 0.72%, or 79 points, to 10,789.
Cairn Energy (CNE.L) shed 11.9p, or 4%, to 280p as news surfaced that the company has bowed to shareholder pressure to drop a proposed £2.5 million share award to company chairman, Sir Bill Gammell.
The award was to be made as part of a plan to return £3.5 billion to shareholders following the sale of its Indian business to Vedanta.
See the FTSE’s performance and the index’s top winners and losers
Ministers demand further haircuts on Greek bonds
Eurozone ministers and Greek government officials are insisting that private bondholders trade in their current bonds in exchange for 30-year bonds at a rate of 3.5%.
The talks with the private sector have been going on for seven months. So far bondholders have offered to take a 50% haircut on the nominal value of Greek debt, but say they cannot accept any less than a 4% return on the country’s debt.
An agreement is needed for the country to avoid a disorderly default, as the next tranche of the bailout for Greece is conditional on an agreement by 13 February, and it must repay €14.5 billion of debt in March.
Other stock markets in Europe also struggled: Germany’s DAX index shed 0.82% to 6,385, France's CAC 40 index fell back 0.81% to 3,311, and the FTSEurofirst 300 index of top European shares slid 0.56% to 1,042.
New manufacturing and services figures for France and Germany were generally better than forecast, and although French production has slowed, there was a slight improvement in economic activity in both countries.
UK public borrowing figures will be published later today and are expected to reflect the impact of the government’s fiscal tightening.
Sterling weakened 0.1% against the dollar to $1.555, and inched ahead 0.02% against the euro to €1.195.
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