London close: FTSE sinks to five-month low as final act of Greek drama unfolds

Heavy falls in the travel, tourism and financial sectors prompted a 2% plunge on the FTSE 100 on Monday as investor sentiment was hammered by concerns about the future of Greece and the wider Eurozone.

The FTSE 100 finished 133.22 points lower (-1.97%) at 6,620.48 by the end of the session, its lowest close since 20 January.

Nevertheless, UK markets fared a little better than their European counterparts with Germany's Dax dropping 3.56%, France's Cac falling 3.74%, Spain's Ibex plummeting 4.56% and Italy's FTSE MIB sinking 5.17%.

Over the weekend, Greece’s government called a referendum on the bailout terms proposed by its international creditors, while imposing capital controls on its banks to defend liquidity. Athens said banks will remain closed until after the public vote on 5 July and account holders would only be able to withdraw €60 a day.

According to the latest reports, Greek banks will open 850 branches on Thursday for the payment of pensions, though they will remain shut for other business all week.

"European equity markets have collapsed as baffled traders try to comprehend Syriza’s latest stalling tactic, this time in the shape of a belated referendum," said IG analyst Alastair McCaig. He said that the decision to hold a public vote "smacks of Syriza shirking its responsibilities and passing the buck onto the Greek population".

After talks with lenders failed at the weekend, Greece has now effectively run out of time to secure funding to help repay €1.6bn to the IMF by Tuesday, the same day that its current bailout agreement expires.

Mohamed El-Erian, the well-known economist and former PIMCO boss, said he sees an 85% chance of Greece leaving the euro and now expects a “massive economic contraction” in the Hellenic nation. UBS, however, has put the probability of an 'Grexit' at 40%.

A sell-off on Asian markets overnight also worried investors as Chinese stocks entered into bear territory, having plunged over 20% in around two weeks. Despite an interest-rate cut by the People’s Bank of China - its fourth since November - the Shanghai Composite plunged 3.34% and the Hang Seng index tumbled 2.61%, the latter’s worst one-day sell-off in over a year.

Travel and tourism bears the brunt of the sell-off

Travel tour operators TUI and Thomas Cook, hotel owners IHG and Whitbread, and airlines IAG and Easyjet were leading markets lower on Tuesday. Concerns about tourism in Greece and the potential impact on tourism from recent terrorist attacks in Paris and Tunisia were likely dampening the mood in the sector.

IAG in particular was registering heavy losses as EU regulators continued to review its proposed takeover of Irish carrier Aer Lingus amid competition concerns.

Stocks in the financial sectors such as Standard Life, Barclays, Schroders and Henderson Group were falling as market volatility increased across Europe.

FTSE 100-listed drinks bottler Coca-Cola HBC, which has a secondary listing in Athens, was also suffering heavy losses.

Precious metal miners Randgold and Fresnillo were two of the four stocks making gains on the Footise as investors sought out safe-haven investments such as gold.

Meanwhile, Ocado was boosted by reports in The Telegraph which said it was close to securing a deal with an international retailer, which would allow the online grocer to expand outside the UK for the first time.

Market Movers

techMARK 3,112.62 -1.79%
FTSE 100 6,620.48 -1.97%
FTSE 250 17,534.67 -1.61%

FTSE 100 - Risers
Intertek Group (ITRK) 2,472.00p +2.06%
Randgold Resources Ltd. (RRS) 4,400.00p +0.59%
Fresnillo (FRES) 700.50p +0.36%

FTSE 100 - Fallers
TUI AG Reg Shs (DI) (TUI) 1,034.00p -7.10%
International Consolidated Airlines Group SA (CDI) (IAG) 493.20p -4.14%
Standard Life (SL.) 458.40p -3.74%
ARM Holdings (ARM) 1,050.00p -3.67%
InterContinental Hotels Group (IHG) 2,610.00p -3.44%
Coca-Cola HBC AG (CDI) (CCH) 1,381.00p -3.36%
Mondi (MNDI) 1,384.00p -3.15%
Schroders (SDR) 3,208.00p -3.02%
Barclays (BARC) 264.25p -2.97%
SABMiller (SAB) 3,323.50p -2.92%

FTSE 250 - Risers
Grainger (GRI) 228.40p +2.19%
Aldermore Group (ALD) 306.80p +1.66%
Acacia Mining (ACA) 311.20p +1.27%
Telecom Plus (TEP) 965.50p +1.26%
Ocado Group (OCDO) 430.00p +1.01%
Jimmy Choo (CHOO) 161.50p +0.94%
Nostrum Oil & Gas (NOG) 580.00p +0.78%
UK Commercial Property Trust (UKCM) 90.50p +0.72%
IP Group (IPO) 210.00p +0.72%
Barr (A.G.) (BAG) 610.00p +0.66%

FTSE 250 - Fallers
Euromoney Institutional Investor (ERM) 1,144.00p -5.22%
Bodycote (BOY) 681.50p -4.95%
Henderson Group (HGG) 262.60p -4.65%
Spire Healthcare Group (SPI) 323.50p -4.57%
SVG Capital (SVI) 480.00p -4.29%
Enterprise Inns (ETI) 123.20p -4.12%
Bank of Georgia Holdings (BGEO) 1,911.00p -4.07%
Synthomer (SYNT) 308.60p -4.01%
Man Group (EMG) 158.60p -3.82%
Ophir Energy (OPHR) 111.30p -3.80%