Dow opens in the red
World markets continued to suffer big losses today after the Greek Prime Minister announced a shock referendum on a vital aid package and fuelled fresh fears for the future of the eurozone.
Wall Street’s Dow Jones Industrial Average followed European markets into the red, falling nearly 2%, as George Papandreou’s unexpected move cast fresh doubts on last week’s much-heralded proposals to protect Europe from collapsing into recession.
The FTSE 100 Index was 146.8 points lower at 5397 after dismal manufacturing figures added to the uncertainty in Europe, while France’s Cac-40 fell 5% and Germany’s Dax dropped 4.2%.
EU leaders last week agreed with banks a 50% haircut on Greek debt and to boost the eurozone bailout fund to €1tn, which follows an earlier decision to shore up banks’ finances.
However, Mr Papandreou last night threw a spanner in the works when he announced his debt-strapped country will hold a vote next January on whether to accept the deal.
The banking sector was worst hit with Barclays falling more than 9% or 16.6p at 178.5p, Royal Bank of Scotland losing more than 6% or 1.5p at 22.7p and Lloyds banking Group dropping 5% or 1.6p at 30.8p.
The Markit/CIPS purchasing managers’ index revealed a decline in the UK manufacturing sector in October, fuelling fears of a double-dip recession and overshadowing better-than-expected GDP figures.
Elsewhere, the China Federation of Logistics and Purchasing said its monthly purchasing managers index fell an unexpectedly large 0.8% to 50.4, just above the 50-level that signifies expansion.
The figures raised fears of a slowdown in Chinese demand and hit the FTSE 100’s miners, including copper giant Antofagasta, which fell 55p at 1112p, and Anglo-swiss firm Xstrata, which was off 53p at 991.2p.
