Greek drama and mining pull FTSE to six-month low - London Report

BRITAIN’S benchmark equity index dropped yesterday to its lowest level in around six months, hit by persistent concerns over Greece and a pullback in mining stocks as metal prices fell.

The blue-chip FTSE 100 index closed down 1.6 per cent at 6,432.21 points, around its lowest since mid-January.

Global stock markets lost ground after a Eurogroup meeting of euro zone finance ministers failed to bring about a clearer picture on the outlook for Greece.

Greek voters yesterday rejected austerity measures imposed as part of a bailout, increasing the risk that Greece may leave the Eurozone.

Mining stocks slid after copper prices fell to six-year lows, partly due to concern about economic growth in China, the world’s top metals consumer.

“While Greece remains in focus, the volatility in Chinese stock markets has continued, impacting on commodity prices and related sectors such as the miners,” Hargreaves Lansdown equity analyst Keith Bowman said.

Rolls-Royce fell 5.4 per cent, extending a 6.3 per cent drop in the previous session when the company cut profit forecasts, after investment banks Natixis, Investec, Bernstein and RBC all reduced price targets on the stock.

Rolls-Royce was among the weakest FTSE 100 stocks in percentage terms, while property group Land Securities was the top gainer, rising 1.6 per cent after UBS raised its rating on the stock to “buy” from “neutral”.

The FTSE 100 is down 2 per cent this year, and some 10 per cent below a record high of 7,122.74 points reached in April.

European shares also extended their losses yesterday because of concerns over Greece.

The pan-European FTSEurofirst 300 closed down 1.6 per cent and the euro zone Euro STOXX 50 fell 2.1 per cent, adding to Monday’s 2.2 per cent drop.

Among gainers, Evonik rose 2.4 per cent after UBS lifted its target price for the stock while Svenska Handelsbanken gained 2.5 per cent after a similar upgrade from Deutsche Bank.

On the downside, Technip sank 8.3 per cent to its lowest level since January after the oil industry engineering and construction group announced a restructuring programme, booking a €650m charge and cutting 6,000 jobs.