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FTSE tumbles as Greek crash rocks markets

Greece's stockmarket falls 13%, sending shockwaves around global markets.

 
FTSE tumbles as Greek crash rocks markets

The FTSE 100 has fallen further into the red in the afternoon's trading as a crash in the Greek stock market rocked investors.

The Greek market has fallen nearly 13% on news of an early presidential election. Parliament will vote on whether to approve the government's candidate Stavros Dimas next Wednesday.

Markets have tumbled as investors fear Dimas will fail to gain enough votes, either in next week's poll or two more parliamentary ballots that may be needed, meaning early general elections are likely. Leftist party Syriza, which opposes Greece's austerity programme, could triumph in a national poll.

The Greek turbulence sent shockwaves around markets, with all major indices down. The FTSE 100 was down 130 points, or 1.9%, at 6,544 points, while Spain's Ibex and France's CAC 40 both fell 2.5%. The German DAX 30 was trading 1.7% lower and Italy's FTSE MIB fell 2.1% while in the US, the S&P 500 dropped 0.9% and the Dow Jones 1.2%.

'Misery loves company; never has this been truer than on the markets today,' said Connor Campbell, financial analyst at Spreadex. 'Another round of poor economic data, more volatility from the permanently volatile Greece and oil's continued descent into the abyss has seen a dismal day for DAX, Dow and FTSE alike.'

Investors rushed to the safe haven of gold, sending the price $30 higher to £1233.14. That move sent precious metals miners Randgold Resources (RRS) and Fresnillo (FRES) to the top of the FTSE 100, up 5.1% and 3.7% to £43.99 and 741.7p respectively.

Tesco (TSCO) remained at the bottom of the index after issuing a profit warning, but had pared some of the morning's losses to trade 7.5% lower at 173.3p. Athens-headquartered Coca-Cola Hellenic (CCB) was the next biggest faller, down 5.5% at £13.26. 

FTSE slumps into red as Tesco and oil weigh

10:43 The FTSE 100 has fallen as Tesco dragged down other supermarkets with another profit warning, fresh drops in the oil price sent energy stocks falling and a disappointing update on UK manufacturing weighed on sentiment.

The UK blue-chip index was trading 70 points, or 1.1% lower at 6,602 points, with Tesco (TSCO) the biggest faller, down 10.1% at 168.4p, after issuing its third profit warning in four months.

Tesco's troubles also weighed on rivals Sainsbury's (SBRY) and Morrisons (MRW), down 3.9% and 5.3% at 227p and 175p respectively.

Only a handful of stocks made gains, with all sectors down in the morning's trading as a broad-based sell-off took hold.

Energy stocks fell towards the bottom of the index as the price of Brent crude fell to a fresh five-year low below $66, before mounting a small recovery to trade just above the $66 mark.

Petrofac (PFC) fell 3.2% to 742.8p, BP (BP) traded 2.1% lower at 408.8p while Shell (RDSb) fell 0.5% to £21.60.

A wider fall in commodity prices, with copper and aluminium dropping, meanwhile weighed on miners. BHP Billiton (BLT) fell 2% to £14.09, Anglo American (AAL) traded 1.7% lower at £12.23, Rio Tinto (RIO) was down 1.4% at £28.42 and Glencore (GLEN) was 1% lower at 310.9p. 

Figures from the Office for National Statistics meanwhile showed a 0.1% drop in industrial production in October, after a 0.7% rise in September.

'A sharp drop in factory output in October is a timely reminder that policymakers cannot be complacent about the UK's recent run of strong growth persisting into the New Year,' said Chris Williamson, chief economist at Markit.

'Expectations of when UK interest rates may start rising will most likely be pushed back with the news that the manufacturing economy is struggling once again, and that the economic upturn remains all too dependent on domestic spending.'

That news heaped pressure on the pound, which fell to $1.5634, from a day-high of $1.5688 before the figures.

A slump in China shares meanwhile weighed on investment trusts focused on the country. The Shanghai Composite fell 5.4% in overnight trading after a large rise over the last month, fuelled by speculation of further central bank stimulus.

Fidelity China Special Situations (FCSS ) fell 4% to 130.3p while JPMorgan Chinese (JMC ) was trading 3.2% lower at 180.2p.

However, analysts at Investec said FCSS remained their 'favoured pick' for investing in China, and pointed out the trust had a lower weighting in financial stocks, which have been worst hit in the slump, than its benchmark.

'FCSS also has a weighting to Hong Kong equities, which have seen much smaller declines and there is also a 5.3% portfolio holding of Alibaba (BABA.K), which has helped FCSS outperform the index over the last few months,' they said. 'All of these features should help the fund continue to outperform the index.' 

3 comments so far. Why not have your say?

RippedOff

Dec 09, 2014 at 18:31

I couldn't believe what I heard the other day that there are still 'ghost jobs' in Greece. The rulers still have a lot to answer for.

Maybe the EU should say enough is enough and effectively force them to have their own currency. Perhaps this will bring them to their senses. Unfortunately, a lot of innocent ordinary people will be harmed. What is the alternative?

report this

Franco

Dec 09, 2014 at 23:08

Rippedoff,

Please stop writing about matters you know nothing about and making more of an idiot of yourself than you are already.

report this

Cape Town

Dec 10, 2014 at 06:12

(Franco, clown)

There are three ways forward for the developed countries -

-war - solves over-supply problems

-another but more severe GFC - fiscal and monetary solutions fail

-military take-over (five year plan) - profound structural reform starting with rebalancing to remove debt

I cannot see other ways forward - can you?

report this

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