FTSE halts rally as Greece debt talks flounder

Britain’s FTSE 100 halted a four-day rally on Monday, as financial stocks fell amid a deadlock in negotiations between Greece and its international creditors over a €130 billion (£108 billion) rescue package.

The UK index of blue-chip shares pulled back 0.37%, or 22 points, to 5,879 and the All Share index gave up 0.4%, or 12 points, to 3,035. See the FTSE’s performance and the index’s top winners and losers.

Portugal fears

Greek political leaders failed on Sunday to agree on the painful reforms demanded by the European Union and International Monetary Fund in return for the new bailout – without which the country will face a chaotic default.

‘To our minds such an outcome would be very negative for Greece, but also raise concerns on the broader ability of the euro area to secure non market funding for those member states where this many prove necessary,’ warned Michala Marcussen, global head of economics at Société Générale.

She added that Portugal was ‘top of the list of concerns’, noting that while the drop in its borrowing costs of late was encouraging, their levels were still far from what would allow the country to return to market funding in 2013, as expected under its current international rescue programme.

Glencore slips

Meanwhile, financials topped the loser board on the FTSE 100, mirroring declines by their rivals on the continent as they gave back recent gains. Admiral Group (ADML.L) lost 31p to £10.07, Aviva (AV.L) shed 5p to 372p and Standard Chartered (STAN.L) weakened 18p to £15.86.

Glencore (GLEN.L) was the second biggest faller, dropping 13p to 470p, following a report in the Financial Times that the commodities trader was to pay a larger-than-expected premium to seal its proposed $88 billion merger with miner Xstrata (XTA.L), a constituent of Citywire Top Stocks®.    

Randgold Resources (RRS.L) was the top gainer, taking on 115p to £75.15, after the gold miner doubled its dividend on the back of a 259% jump in profit last year.

Elsewhere, small-cap French Connection (FCCN.L) sank 7.5p, or 13%, to 50.2p in the wake of a fresh profit warning from the fashion group.

‘After a second profits warning in six months management will need to improve credibility before any change in view,’ said Freddie George, analyst at Seymour Pierce, cutting the broker’s price target to 50p from 60p.

German factory orders

Stock markets elsewhere in Europe also retreated: Germany’s DAX index faded 0.26% to 6,749, France's CAC 40 index slid 0.97% to 3,395, and the FTSEurofirst 300 index of top European shares was 0.51% lower at 1,071.

Sterling slipped 0.34% versus the dollar to $1.576 but edged up 0.04% against the euro to €1.206 ahead of data on eurozone investor confidence and German factory orders.