FTSE flat as investors ponder aftermath of bailout

London stocks remained flat this morning as investors took time to consider their positions in the aftermath of volatile trading on Monday.

With few major firms announcing results the focus remained on the Eurozone, where the weekend's bailout of Spanish banks appears to have done little to calm markets. Focus will now shift to Greece, which is due to hold an election this Sunday.

The bank deal was seen as fixing only some of Spain's problems, while a Greek exit from the bloc - accompanied by unpredictable spillover for the rest of Europe - will become more likely if Sunday's vote returns an anti-bailout government.

Yesterday the index jumped as high as 5,536.27, before giving up all the gains and closing at 5,432.37. But this morning there was much less movement, with defensive stocks such as tobacco and food doing well.

British American Tobacco led the gains, adding 1.7 per cent in early trading.

Meanwhile asset manager Schroders and insurance firm Admiral were close behind, with both gaining 1.4 per cent.

Interdealer broker ICAP, which is involved in a troublesome takeover of stock exchange operator Plus Markets, added 1.3 per cent.

Mining firm Evraz was the biggest faller, losing almost three per cent.

Banks suffered with RBS down 0.3 per cent, Barclays off two per cent and Lloyds down 1.5 per cent. However HSBC bucked the trend and added 0.7 per cent.

Chip designer ARM Holdings, which provides processors for Apple products, lost 1.9 per cent after the American computer giant failed to announce a major new product launch at a developer conference held yesterday.

Outside the index Yell Group, owner of the Yellow Pages, added 6.2 per cent while Premier Foods dropped by 8.4 per cent.

In Asia the Nikkei closed down one per cent while the Hang Seng was off 0.4 per cent.