FTSE 100 declines on weaker metal prices and concerns over Greek debt

Britain’s top share index posted its steepest one-day decline in six weeks yesterday, pressured by miners hit by weaker metals prices, and banks on revived concern over Greece’s debt.

The FTSE 100 closed 49.36 points, or 0.9 per cent, lower at 5,712.70, its lowest close since March 31, after it shed 0.3 per cent on Wednesday.

“Obviously Greece is still on everyone’s mind because that hasn’t been sorted out, and weak commodity stocks, which obviously have a very big weight on the FTSE, are going to pull the index down,” said Mark Priest, senior equities trader at ETX Capital.

Miners took the most points off the index, with Xstrata, Eurasian Natural Resources and Kazakhmys the worst off, dropping 2.9 to 3.8 per cent.

It was a similar story with energy stocks which fell as crude prices were hurt by the stronger dollar and a rise in US crude stockpiles to their highest level in nearly 10 months.

BP, Cairn Energy and Royal Dutch Shell slipped 0.3 to 0.8 per cent.

Disappointing US jobless claims data also affected market sentiment. Initial claims for state unemployment benefits unexpectedly rose 18,000 to 460,000, the Labor Department said. Economists expected claims to edge down to 435,000.

Markets pounded Greek bonds and banking stocks yesterday, driving the debt-stricken eurozone member’s borrowing costs to new highs and pushing it closer to tapping a last resort EU/IMF safety net.

Risk sensitive UK bank stocks fell, with Barclays, HSBC, Lloyds Banking Group, Royal Bank of Scotland and Standard Chartered off 0.1 to three per cent.

As expected, the Bank of England kept interest rates at a record low of 0.5 per cent.