Footsie falls again amid further Greek unrest

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The Independent Online

The FTSE 100 Index was mired in the red again today as the sell-off over Greek debt contagion showed no sign of easing.

London's Footsie slumped another 1.3 per cent, taking it to levels not seen for more than two months, while markets across Europe and the US suffered further heavy losses as violent protests in Greece piled on the pressure.

America's Dow Jones Industrial Average plunged nearly 1 per cent soon after opening, with the Cac 40 in France - down 3.6 per cent yesterday - fell a further 1.7 per cent and Germany's Dax was also sharply lower.

The 110 billion euro (£95 billion) Greek bailout package agreed at the weekend has failed to calm worries that it will not be enough to resolve the country's woes and that the crisis will spread to other European countries such as Portugal and Spain.

Mass protests and strike action in Greece have added to the uncertainty.

The FTSE 100 showed signs of steadier trading earlier in the day, but soon resumed heavy falls after the US opened deep in the red.

The UK blue chip share index has now lost nearly 400 points since last Monday, falling close to the 5300 mark - a level not seen since February.

Debt contagion concerns have also hit the euro, which continued to tumble against the dollar today, hitting its lowest point in 14 months.

Among UK stocks, commodity firms fought to regain some of yesterday's steep declines, but many remained in negative territory.

BP struggled to recover the 3 per cent loss the previous session, up 1 per cent today, although it continued to feel the heat as the market assesses the impact of the Gulf of Mexico oil spill on the company.

British Airways was down another 3 per cent as the volcanic ash cloud returned to wreak yet more havoc in the north of England and Scotland.











David Jones, chief market strategist at IG Index, said markets on both sides of the Atlantic continued to "haemorrhage" in trading today, with the FTSE closing down 69.2 points at 5341.9 - a fall of 1.3%.

He added: "Markets seem to be trading on the assumption that Greece is merely the canary in the coalmine and that fiscal contagion is now inevitable.



"While markets may correct upwards in the short-term, Europe's leaders will really need to draw a line of unmistakable clarity in the sand before investors are willing to plough money back into equities."



But there was some relief for BP today as it held on to gains at the close.



BP confirmed it had managed to stop the smallest of three oil leaks in the Gulf of Mexico, but oil is still flowing out at a rate of 5,000 barrels a day.



Peter Hitchens, analyst at Panmure Gordon, said the market reaction to the oil spill had been "overdone".



He estimated BP could spend up to two billion US dollars (£1.3 billion) getting the well under control, although he calculates the wider cost in damages to industries such as fishing and tourism at some 10 billion dollars (£6.6 billion) - a cost that may be split by BP's oil well partners.



There were only a handful of blue chip stocks that joined BP in making gains, including miners BHP Billiton and Rio Tinto up 1% each, but many of their counterparts saw further losses after yesterday's news of a planned 40% super-tax on mining profits by the Australian government.

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