Financials sink after Greece's PM calls for referendum on bailout deal

FTSE:5,421.57 (–122.65) Mid-250:10,167.60 (–312.14) Small Cap: 2,827.85 (–30.37)

LONDON EQUITIES remained under pressure yesterday, as the sudden prospect of a referendum in Greece on the terms of its bailout package took a heavy toll on sentiment.

Riskier banks and mining stocks fell to the bottom of the FTSE 100, with the presence of miners there all the more remarkable after soothing Chinese economic data.

The FTSE 100 lost 2.2 per cent.

Royal Bank of Scotland, one of the most sensitive stocks to the outlook for the Greek deal, lost 8.1 per cent to 22.27p.

Barclays made the biggest single loss, down 9.5 per cent at 176.8p. On the list of the 10 biggest fallers on the index, five were financial stocks.

Kazakhmys was the biggest faller among resource stocks, down 7.1 per cent at 862p. The losses were broad-based, with only seven FTSE 100 constituent making gains.

“Pessimism over the outlook for resolving the European debt crisis continues to mount,” said Peter Stanhope, institutional trader at IG Markets.

“China is evidently cooling on the scale of its involvement in the bailout while the Greek prime minister has shocked markets with the announcement of a referendum . . . and with more elements adding to the uncertainty like this, is seems likely that the turbulent market conditions will prevail for some time yet,” he said.

Michael Hewson, senior analyst at CMC Markets, said: “Anyone thinking that markets would ease into the year end after [the rally] last week, now have the prospect of even more uncertainty until next year.”

G4S was up 0.4 per cent at 246p after it confirmed Financial Timesreports that it had abandoned its £5.2 billion deal to acquire ISS of Denmark.

Insurer Legal General was 7.2 per cent weaker at 102.6p, in line with the wider market losses, after it reported static sales in the nine months to the end of the third quarter. It also said it remained on track to reach its one billion sterling cash generation target for the full-year.

BHP Billiton slid 2.7 per cent to 1,915p as base metals fell. Rio Tinto fell 3.9 per cent to 3,252p.

Antofagasta lost 4.5 per cent to 1,114p.

888 Holdings advanced 6.8 per cent to 35.25p as the online gambling company reported record quarterly revenue. – (Copyright The Financial Times Limited 2011/Bloomberg)