FTSE retreats as Greek ‘game of chicken’ continues

Britain’s FTSE 100 pulled back from a six-month high on Friday, as talks over Greece’s debt woes continued and ahead of key US economic growth data.

The UK index of blue-chip shares faded 0.23%, or 13 points, to 5,782 and the All Share index fell 0.24%, or eight points, to hit 2,981. See the FTSE’s performance and the index’s top winners and losers.

Portugal fears

Greece and its private sector creditors aim to reach an agreement on restructuring the country’s debt in the coming days in order to avert a disorderly default, with both sides saying they made progress in the talks on Thursday.

But Grant Lewis, economist at Daiwa Capital Markets, noted that despite the talk of progress, the ‘clock continues to tick’ towards 20 March, when Greece has a €14.4 billion (£12 billion) bond maturing that it cannot afford to repay.

Branding the negotiations ‘game of chicken’, Lewis added: ‘As ever with Greece, this looks as though it’s going to go down to the wire.’

Meanwhile, the yield – or implied interest rate – on benchmark 10-year Portuguese government bonds eased 13 basis points to 14.74% after hitting a euro-era peak of 15.31% on Thursday, amid fears the country will follow Greece in requiring a second bailout.

Other stock markets in Europe also eased: Germany’s DAX index slipped 0.21% to 6,526, France's CAC 40 index shed 0.28% to 3,354, and the FTSEurofirst 300 index of top European shares inched down 0.04% to 1,051.

Hornby profit off the rails

Intercontinental Hotel Group (IHG.L) was the biggest faller on the FTSE 100, dropping 35p to £13.22, after UBS downgraded the hotelier to ‘sell’ from ‘neutral’.

Banks were among the other top casualties, amid the worries over the eurozone. Lloyds (LLOY.L) dropped 0.8p to 32p and Royal Bank of Scotland (RBS.L) lost 0.7p to 27p.

Imperial Tobacco (IMT.L) topped the FTSE 100 leader board amid reports of positive broker comment on the stock from Citi.

Elsewhere, Hornby (HRN.L) tumbled 32p to 95p after the toy manufacturer issued a profit warning following a weak run-up to Christmas.

Numis, broker to the Scalextric maker, said that ‘although the product pipeline remains strong’, its reduced earnings forecasts led it to cut its recommendation to ‘add’ from ‘buy’.