London close: Stocks slip after Greek 'no' vote, but downside limited

UK stocks finished with moderate losses on Monday in the aftermath of the Greek public's rejection of creditors' bailout proposals, with Rolls-Royce dropping sharply after a profit warning and miners bearing the brunt of a reduction in risk appetite.

The result of Sunday's Greek referendum showed that 61.3% voted 'no' to the latest bailout terms, pushing the country further into uncharted territory which analysts said could lead to an eventual exit from the Eurozone.

Nevertheless, downside on UK markets was limited following the surprise resignation of confrontational Finance Minister Yanis Varoufakis. Varoufakis, who had been a staunch opponent of the spending cuts and tax increases proposed by Greece's lenders, decided to step down in an effort to make negotiations run more smoothly.

An emergency euro group leader's summit has now been scheduled for Tuesday evening to discuss what to do next.

The FTSE 100 finished the session down 0.76% at 6,535.68.

"So far stock market reaction has been negative but not disastrous. This suggests a fair degree of pessimism over the Greek referendum result had already been priced into markets, after all this bolt has hardly come out of the blue," said Hargreaves Lansdown analyst Laith Khalaf.

In addition, there was a degree of optimism that the European Central Bank would intervene to limit the fallout.

However, losses were much more severe across European indices, as Italy's FTSE MIB dropped 3.7%, France's CAC fell 2% and Germany's DAX declined 1.4%.

Rolls-Royce leads blue chips lower

Engine maker Rolls-Royce had trimmed losses by the afternoon but was still sharply lower after disappointing investors with a profit warning, its third in under 18 months. The company guided to a full-year underlying profit of between £1.33bn-£1.48bn, compared with previous target of £1.4bn-1.55bn, citing a deterioration in offshore markets. The stock finished 6.3% lower at 802.5p, having touched a 52-week low of 771.9p early on.

Mining stocks were out of favour in London, such as Vedanta, Anglo American, BHP Billiton and Antofagasta, as shares tracked metal prices lower with copper in particular losing over 3%.

Similarly, a steep drop in the price of Brent crude, down 2% at $58.27 a barrel, was weighing on oil stocks including Shell, BP and BG Group.

Heading the other way was postal operator Royal Mail after Goldman Sachs boosted its target price for the stock to 610p from 585p, saying it expects to seen an improvement in underlying profitability. Goldman maintained a ‘buy’ rating.

Morgan Stanley boosted BAE Systems from ‘equalweight’ to ‘overweight’.

Market Movers
techMARK 3,099.80 -0.47%
FTSE 100 6,535.68 -0.76%
FTSE 250 17,443.28 -0.97%

FTSE 100 - Risers
Marks & Spencer Group (MKS) 547.00p +1.58%
Reckitt Benckiser Group (RB.) 5,589.00p +1.14%
Royal Mail (RMG) 510.50p +1.09%
SSE (SSE) 1,574.00p +1.03%
Barratt Developments (BDEV) 646.00p +1.02%
Compass Group (CPG) 1,064.00p +0.76%
Associated British Foods (ABF) 2,912.00p +0.69%
Smiths Group (SMIN) 1,141.00p +0.62%
Centrica (CNA) 267.40p +0.60%
Fresnillo (FRES) 687.00p +0.59%

FTSE 100 - Fallers
Rolls-Royce Holdings (RR.) 802.50p -6.30%
Schroders (SDR) 3,061.00p -3.56%
Royal Bank of Scotland Group (RBS) 346.50p -3.56%
TUI AG Reg Shs (DI) (TUI) 1,017.00p -3.14%
Weir Group (WEIR) 1,666.00p -3.08%
Hargreaves Lansdown (HL.) 1,109.00p -2.29%
Aviva (AV.) 487.00p -2.19%
Ashtead Group (AHT) 1,051.00p -2.14%
Anglo American (AAL) 883.20p -2.13%
GKN (GKN) 325.70p -2.13%

FTSE 250 - Risers
Nostrum Oil & Gas (NOG) 618.00p +3.52%
Grainger (GRI) 232.20p +3.02%
Bellway (BWY) 2,447.00p +2.26%
AL Noor Hospitals Group (ANH) 959.00p +1.91%
Spire Healthcare Group (SPI) 345.40p +1.59%
Bovis Homes Group (BVS) 1,157.00p +1.40%
Mitchells & Butlers (MAB) 458.30p +1.39%
Just Retirement Group (JRG) 174.30p +1.10%
Allied Minds (ALM) 563.00p +1.08%
Redrow (RDW) 465.50p +1.00%

FTSE 250 - Fallers
Vedanta Resources (VED) 472.80p -6.93%
Thomas Cook Group (TCG) 125.60p -4.78%
Hunting (HTG) 518.50p -4.60%
Alent (ALNT) 340.50p -4.38%
Tullow Oil (TLW) 319.80p -4.14%
Ted Baker (TED) 2,962.00p -3.64%
Man Group (EMG) 147.00p -3.48%
Fidelity China Special Situations (FCSS) 142.40p -3.00%
Big Yellow Group (BYG) 623.00p -2.96%
Jupiter Fund Management (JUP) 430.20p -2.85%