Greek default fears send FTSE down

The FTSE 100 Index fell 43 points to 5852

Published: 9:31am, 10th February 2012
Updated: 12:40pm, 12th February 2012

Barclays shares have advanced despite a profits fall but world markets slid after an agreement on crucial austerity measures in Greece fell apart.

The bank reported a 3% drop in pre-tax profits to £5.9 billion and admitted it is unlikely to meet its return on equity target of 13% by 2013 - the ratio is currently at 6.6%. But its shares rose 0.95p to 234.05p after chief executive Bob Diamond announced a 9% rise in the final dividend and progress on reducing bad debts.

However, the wider FTSE 100 Index fell 43.1 points to 5852.4 amid fresh fears that Greece will be unable to stave off a default.

It had been hoped that the country had taken an important step to securing the next round of bailout funds when its coalition government agreed further painful austerity measures. But the agreement unravelled when several members of the cabinet resigned amid civil unrest in Athens.

The latest drama followed a meeting of eurozone finance ministers who insisted that Greece had to save an extra 325 million euro (£272.5 million), rubber-stamp the cuts in parliament and guarantee in writing that they will be implemented even after planned elections in April.

Adding to the uncertainty, Greece also still needs to agree a deal to write off most of its debts with private creditors before it can secure the next round of bail-out funds.

The Dow Jones Industrial Average in the US was down 1% as the London market closed, while markets in France and Germany were also in the red.

The pound was up against the euro at 1.19 after the single currency was hit by the latest Greek setbacks. Sterling was down at 1.58 against the dollar.

Retailer Next joined Barclays on the risers board after Deutsche Bank upgraded the stock from hold to buy and said the company's continued control of costs should benefit it in the face of tough conditions. Its shares were up 14p to 2733p.

The same bank downgraded Cable & Wireless Communications following a third quarter trading update from the regional telecoms firm. It was the biggest faller in the FTSE 250 Index after shares dropped 17%, or 7.2p to 36.3p, in the wake of disappointing trading in Panama.