FTSE see-saws on doubt over outcome of summit

BRITAIN’S top shares fell yesterday after comments from a German government official eroded optimism about a comprehensive deal to solve the Euro zone’s debt crisis at this week’s crunch EU summit.

The FTSE 100 index ended down 21.81 points, or 0.4 per cent, at 5,546.91, after a choppy day when the index hit an intra-day high of 5,631.88.

The senior German government official, briefing reporters on condition of anonymity, said Berlin is increasingly pessimistic about the chances of a deal, accusing some governments of failing to grasp the gravity of the situation.

This took the steam out of an early rally from the UK benchmark inspired by a Financial Times report that eleventh-hour talks had begun to create a bigger financial “bazooka” to present to the European Union Summit today and tomorrow.

“The markets are very nervous ahead of the summit. They realise that in the past European officials have over-promised and under-delivered – there’s absolutely no room for disappointment this time around,” said Henk Potts, market strategist at Barclays Wealth.

“We have to get the comprehensive plan, and we have to get the details of that. Without that then of course markets have the potential to go back into reverse again.”

Joshua Raymond, market strategist at City Index, said: “There is every chance that with the stakes so high and all investor attention towards developments in Brussels, we could see a very edgy and nervy market over the course of today and tomorrow’s sessions, with prices reacting to all news, rumour and speculation out of Belgium.”

Riskier assets such as banks and insurers ended the day lower.

ICAP dropped 4.4 per cent, the biggest FTSE 100 faller, as traders cited the impact of a downgrade by Morgan Stanley to “equal-weight” from “overweight”.