London midday: Stocks at lowest in a month as Greek fears intensify

UK stocks dropped sharply on Tuesday morning with the Footsie on track for its lowest close in over a month as investors scaled back their appetite for risk amid ongoing tensions between Greece and its creditors.

London's FTSE 100 was down 1.2% at 6,793.01 by midday. It has not closed below the 6,800 mark since 2 February.

Eurozone creditors have put more pressure on Greece to implement reforms to unleash aid and avoid bankruptcy. The Eurogroup ended discussions about Greece on Monday after about an hour in Brussels, as Greek finance minister Yannis Varoufakis was told to map out a realistic programme of fiscal reforms.

Jeroen Dijsselbloem, head of the Eurogroup and Dutch finance minister, said: “We have spent the last two weeks discussing who will meet who, where and in what configuration […] It’s been a complete waste of time.”

The European commission, the International Monetary Fund and the European Central Bank will begin technical talks over the Greek bailout proposals on Wednesday, Dijsselbloem said.

"Athens is dragging its heels over reforms and patience is running low in Brussels. The Greek government is pushing the envelope with its creditors and the market is scared by the prospect of another long drawn-out debt negotiation," said analyst David Madden from IG.

Chinese stimulus hopes rise

Chinese consumer-price inflation rebounded from a five-year low but producer prices remained in deflation, raising the prospect of further stimulus measures by the country’s central bank.

The annual rate of consumer price index (CPI) inflation picked up to 1.4% in February from 0.8% in January, above forecasts for a 1% rise. The uptick came after the People's Bank of China introduced more stimulus measures and the Lunar New Year holiday pushed up food and transport costs.

At the same time, China’s producer price index dropped 4.8% from a year ago, worsening from January’s 4.3% drop and marking three full years of declines. Analysts at Goldman Sachs said they expected the rise in CPI inflation to "alleviate the anxiety policy makers have about weak growth and risk of deflation".

However, they added: "We still expect further loosening measures in the coming months as overall economic activity growth remains weak and CPI inflation is likely to ease again in March as the Chinese New Year distortion disappears."

Commodity stocks and Prudential fall

Mining stocks declined as risk appetite faded with BHP Billiton, Antofagasta and Anglo American among the worst performers. BHP Billiton fell despite saying it's on track to deliver 245m tonnes of iron ore for the year ending 30 June 2015, while Antofagasta slipped on the court ruling that it must destroy at least part of its tailings dam at the Los Pelambres copper project in Chile.

Oil producers such as Tullow, Shell and BG Group were also out of favour as crude prices declined. Brent futures were down 1.4% at $57.73 a barrel by noon.

Insurer Prudential fell after confirming speculation that Credit Suisse has poached its boss Tidjane Thiam to replace its long-standing chief executive Brady Dougan. Prudential, which also released final results showing operating profits growth slowed to 14% from 17% at the half-year stage, said it had identified a successor from within.

Sector peer Esure also dropped after saying that annual profits declined 12.8% on the back of challenging conditions in the insurance market and costs associated with the takeover of Gocompare.

G4S was among the best performers after the security group reported a better-than-expected rise in full-year profits and raised its final dividend by 5%. The company did, however, raise provisions for underperforming UK government contracts by £45m.

Shares in British outsourcing group Capita were hit by a downgrade at Credit Suisse to 'neutral', as the Swiss bank raised concerns about "uncomfortable political uncertainty" ahead of the elections in May.

Market Movers
techMARK 3,134.75 -0.46%
FTSE 100 6,793.01 -1.21%
FTSE 250 17,042.79 -0.72%

FTSE 100 - Risers
G4S (GFS) 298.70p +2.65%
Standard Life (SL.) 451.70p +1.12%
Schroders (SDR) 3,117.00p +0.87%
Dixons Carphone (DC.) 438.60p +0.80%
Shire Plc (SHP) 5,250.00p +0.77%
easyJet (EZJ) 1,713.00p +0.65%
London Stock Exchange Group (LSE) 2,470.00p +0.65%
Barratt Developments (BDEV) 513.50p +0.49%
HSBC Holdings (HSBA) 568.60p +0.37%
Sky (SKY) 994.00p +0.20%

FTSE 100 - Fallers
Tullow Oil (TLW) 320.60p -7.37%
BG Group (BG.) 873.00p -5.03%
BHP Billiton (BLT) 1,492.50p -3.30%
Weir Group (WEIR) 1,826.00p -3.23%
Sainsbury (J) (SBRY) 267.20p -3.01%
Royal Dutch Shell 'B' (RDSB) 2,077.50p -2.97%
Antofagasta (ANTO) 732.50p -2.66%
Prudential (PRU) 1,620.00p -2.62%
RSA Insurance Group (RSA) 401.90p -2.55%
WPP (WPP) 1,520.00p -2.50%

FTSE 250 - Risers
Inchcape (INCH) 795.50p +7.35%
Allied Minds (ALM) 605.00p +7.08%
Just Eat (JE.) 349.50p +2.61%
NMC Health (NMC) 645.00p +2.38%
Unite Group (UTG) 565.00p +1.89%
Beazley (BEZ) 286.00p +1.74%
CLS Holdings (CLI) 1,706.00p +1.19%
Workspace Group (WKP) 843.50p +1.02%
Ocado Group (OCDO) 374.10p +0.97%
Melrose Industries (MRO) 284.30p +0.96%

FTSE 250 - Fallers
esure Group (ESUR) 215.00p -8.04%
Premier Oil (PMO) 143.80p -7.23%
Lonmin (LMI) 117.70p -6.81%
Cairn Energy (CNE) 185.40p -6.41%
Ophir Energy (OPHR) 131.80p -5.92%
Afren (AFR) 5.17p -5.48%
Petra Diamonds Ltd.(DI) (PDL) 175.90p -5.38%
Kaz Minerals (KAZ) 210.10p -4.93%
IP Group (IPO) 230.00p -4.52%
RPS Group (RPS) 234.40p -4.52%