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Markets dive as Greek leftist says austerity plan ‘null’
Markets slide as Greek politicians threaten to tear up EU austerity deal and Spain announces £8 billion bank bailout for Bankia.
Markets across Europe slid on Tuesday amid threats from Greek politicians to pull out of the EU bailout plan.
The FTSE 100 shed 1.78%, or 101 points, to 5,555 and the Mid-250 index dropped 2.54%, or 283 points, to 10,873. Tuesday’s poor performance means the FTSE 100 is down 0.3%, or 17.7 points in the year to date, having made a loss of £4.6 billion. See the FTSE’s performance and the index’s top risers and fallers.
Greek anti-austerity party attempts coalition
Markets tumbled as Alex Tsipras, leader of Greece's left-wing SYRIZA party, said that the austerity measures imposed by the joint EU and International Monetary Fund (IMF) bailout were ‘null’. Some 70% of the Greek public voted for anti-austerity parties during elections over the weekend.
Tsipras, whose party came second in Sunday’s elections, said he would attempt to form a coalition based on backing out of the terms of the bailout deal, which has so far held the country back from a messy default and a possible exit from the monetary union.
The announcement prompted a sell-off in stock markets across Europe: Germany’s DAX index lost 1.95% to 6,441, France's CAC 40 index gave up 2.8% to 3,124, and the FTSEurofirst 300 index of top European shares lost 1.66% to 1,018.
Spain announced an £8 billion rescue plan for the country’s third-largest bank, Bankia. The bailout package pushed up the country’s borrowing cost as the yield on 10-year Spanish bonds rose 10 basis points to close at 5.84%.
Stateside stocks also felt the impact of the instability in the eurozone: the Dow Jones Industrial Average dropped 1.2% to 12,853, the Standard & Poor's 500 index slipped 1.36% to 1,351, and the Nasdaq Composite index fell 1.44% to 2,917.
Aviva rises as CEO resigns
Aviva (AV.L) added 0.6p, or 0.2%, to 302.9p following the resignation of chief executive Andrew Moss following a shareholder revolt at his pay package at last week’s AGM. The company’s shares have lost 56.3% in the past 10 years.
Cyclical stocks were hit the hardest, falling to the bottom of the FTSE 100 index: Polymetal International (POLYP.L) dropped 76.5p, or 8.6%, to 807p; Fresnillo (FRES.L) gave up 112p, or 7.4%, to £13.94; Randgold Resources (RRS.L) shed 347p, or 6.8%, to £47.73; and Vedanta Resources (VED.L) 63p, or 5.6%, to £10.59.
Hedge fund Man Group (EMG.L) shed 6.3p, or 7.1%, to 82.5p as the embattled group reshuffled the management of its flagship AHL fund, with Douglas Greenig taking on the role of chief risk officer.
Rail software group Invesys (ISYS.L) took on 10.5p, or 5.2%, to 213p on speculation that the British engineering group may be a bid target.
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- Tullow Oil PLC (TLW.L)
- Aviva PLC (AV.L)
- Polymetal International PLC (POLYP.L)
- Fresnillo PLC (FRES.L)
- Randgold Resources Ltd (RRS.L)
- Vedanta Resources PLC (VED.L)
- Man Group PLC (EMG.L)
- Invensys PLC (ISYS.L)
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by Gavin Lumsden on Oct 01, 2014 at 17:04