Britain's FTSE dips as Greek deal goes to the wire
06/02/2012 at 11:08
* FTSE 100 down 0.3 pct
* Banks down as Greece under pressure to clinch deal
* Glencore falls on talk of higher premium for Xtrata deal
By Francesco Canepa Britain's blue-chip index traded a touch lower on Monday morning, reversing on last week's rally as tensions rose in Greece's battle to secure a further debt bailout.
The FTSE 100 index was down 15.62 points, or 0.3 percent, at 5,879.77 points at 0945 GMT after closing in "overbought" territory on Friday, when estimate-beating U.S. jobs data boosted hopes for global demand.
The index was still trading close to its six-month high after rising 5.3 percent in the year to date, boosted by strong economic data from some of the world's largest economies and a move by the European Central Bank to inject liqudity into the banking system to avert a credit squeeze.
"No-one is short anymore and that's a little worrying. If there's any delay in Greece it's going to be rather ugly," a trader said. "You don't need much to knock it."
The Greek government must tell the European Union whether it accepts the painful terms of a new bailout deal but the country's coalition parties are still trying to iron out several contentious points.
A spokesman for one of the parties said Athens faced a deadline on Monday, although this was later denied by a government official.
The prospect of a disorderly default by Greece would have heavy consequences for the European financial system amid fears that other struggling countries in the Euro zone may face a similar fate.
The UK banking sector fell 0.8 percent as investors cashed in on part of Friday's gains. Miners
and insurance companies were also hit by profit takers, falling between 0.9 and 1.2 percent.
Glencore International fell 3.9 percent to the bottom of the index as the Financial Times reported the commodities trader was set to offer a bigger than expected premium to seal its proposed $88 billion merger with global miner Xstrata .
"There is no way on earth that Xstrata's chief executive Mick Davies will sell for no premium," Justin Haque, an equity sales trader at Hobart Capital said.
"You've got one technical situation where pretty much everybody has covered their Glencore and they're waiting to buy Xtrata on a dip."
Meanwhile shares in Randgold Resources outperformed, gaining 4.1 percent to become the top blue-chip gainer, after doubling its dividend on the back of a 259-percent profit increase.
Editing by Greg Mahlich
francesco.canepa@thomsonreuters.comReuters Messaging: francesco.canepa.thomsonreuters.com@reuters.net
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