FTSE subdued as hopes pinned on a Greek deal
BRITAIN’S blue-chip index closed flat yesterday after staging a late recovery on talk that Greece was making progress towards securing a bailout deal and avert a messy default.
The FTSE 100 gauge ended the session 1.94 points lower at 5,890.26 as gains among banks and oil stocks offset heavy losses in the mining sector, which was hit by signs of slowing demand in China and a mixed reception to a proposed merger between Glencore and Xstrata.
The prospect of avoiding a chaotic default of Greece, which would batter the European financial sector and spark contagion fears in Italy and Spain, helped financial shares, with banking and non-life insurance stocks ending the day up 0.8 per cent and 0.7 per cent respectively.
Pending a solution in Greece, the general market sentiment remained subdued and defensive shares such as pharmaceutical and food and beverage groups featured among the top gainers, along with oil stocks, which are regarded as a safe source of dividend in a high crude price environment.
Underperforming peers was drug-maker GlaxoSmithKline, which reported disappointing fourth quarter results.
Xstrata was the biggest FTSE 100 faller, shedding 4.9 per cent after commodities trader Glencore inked a $41bn all-share deal to buy the 66 per cent of the miner it did not already own at a lower premium than some had expected.
Glencore will offer a 15 percent premium to Xstrata share price last Wednesday, below the 20 per cent premium some analysts had expected, causing two key Xstrata shareholders to say they would vote against the deal on valuation grounds..
The deal came as the broader mining sector fell for a second consecutive session on signs demand from China is slowing.