FTSE takes a breather as clouds gather over Greece

BRITAIN’S top share index retreated from six-month peaks yesterday as Eurozone debt woes prompted investors to take profits in banking stocks and rebalance portfolios in favour of high dividend payers.

The fall on the London bourse chimed with weaker equity performance in Europe and the United States, on worries that Greece could be heading for a messy default after it failed to secure a restructuring deal with private bond holders on Monday.

“Investors are getting a bit concerned that these negotiations with Greece and private bond holders are failing to come up with anything. That has taken the gloss off the market,” said David Morrison, market strategist at GFT Global. “It’s a fairly good excuse to take a breather.”

The FTSE 100 closed down 30.66 points, or 0.5 per cent, at 5,751.90, off Monday’s six-month closing high of 5,782.56.

Financials led the market lower, with RBS down four per cent and Lloyds off nearly three per cent.

Broker downgrades weighed on fund firm Ashmore and independent financial adviser Hargreaves Lansdown, which lost 2.4 and 3.4 per cent respectively.

A downgrade of several French banks by Standard & Poor’s ratings agency overnight, which follows the recent cut in France’s sovereign rating, added to the negative sentiment on the financial sector.

International Power -- one of the biggest dividend payers in the UK which rewarded shareholders with £1.6bn -- was up 2.3 per cent, leading the FTSE 100 gainers.

British Gas owner Centrica added 1.8 per cent, while SSE closed up 1.4 per cent.