London close: Greek worries continue as Footsie drops 1%

3rd Oct 2011 16:48

Losses in London were trimmed by the end of trade on Monday after a relatively better start on Wall Street, as US benchmarks fell by just a few points. Nevertheless, concerns over the Greek deficit continued to weigh on sentiment in Europe, with major markets across the continent suffering falls of at least 1%.Despite Greece's tough austerity measures, the debt-stricken country revealed on Sunday that it will miss its deficit target for 2011, as it unveiled plans for job cuts across the public sector. According to its draft budget, Greece's deficit should reach 8.5% of gross domestic product (GDP) this year, well above the 7.6% target. While this is expected to be cut to 6.8% of GDP in 2012, the figure still comes below the 6.5% forecast. Helping limit losses in the US after the open was the Institute for Supply Management manufacturing index for September, which rose unexpectedly to 51.6 points, from 50.6 points in August. Consensus was looking for a decline to 50.3.A better-than-expected reading in the UK manufacturing sector, helped trim losses in London. The Markit/CIPS manufacturing purchasing managers index (PMI) for the month of September has come in at 51.1, after last month´s 49.4 (Consensus: 48.5). Likewise, the latest Chinese PMI data (from the Chinese Federation of Logistics and Purchasing) has come in relatively better than expected, although market chatter continues to centre on downside risks to the country's economic outlook. Worries over a slow-down in Chinese economic growth continued to batter luxury goods firm Burberry, which fell 7%. Nomura issued a note this morning ahead of Burberry's first half trading update on 12 October, saying that margins will be hit by increased investment in flagships, customer services and share schemes. Vedanta was the worst perform though despite Cairn India (in which Vedanta is acquiring a large stake) announcing that it has discovered the first hydrocarbons in Sri Lanka, after drilling its CLPL-Dorado-91H/1z well, the first well to be drilled in the country in three decades. Cairn Energy was also lower. Precious metals miners Randgold Resources and Fresnillo were among the high risers, as the market free-fall prompts nervous investors to rush for the perceived safety of gold and silver. The retailers performed relatively well today, with Sainsbury, Marks & Spencer, Home Retail and Ocado registering decent gains. Dunelm, Mothercare and Kesa Electricals were also in demand.OTHER MARKETSBrent crude was 0.08% lower at $102.68, despite dropping as much as 3% earlier on, after the ISM data suggested that growth in the US could lead to increased demand for fuel.Meanwhile copper, gold and silver prices were 0.54%, 2.18% and 2.38% higher, respectively.BCFTSE 100 - RisersRandgold Resources Ltd. (RRS) 6,520.00p +3.66%Sainsbury (J) (SBRY) 281.10p +2.29%Reckitt Benckiser Group (RB.) 3,330.00p +1.74%International Power (IPR) 311.20p +1.43%Vodafone Group (VOD) 168.55p +1.38%Scottish & Southern Energy (SSE) 1,312.00p +1.31%British American Tobacco (BATS) 2,760.00p +1.15%Fresnillo (FRES) 1,604.00p +1.13%Marks & Spencer Group (MKS) 318.00p +1.08%Tate & Lyle (TATE) 632.50p +1.04%FTSE 100 - FallersVedanta Resources (VED) 1,010.00p -8.27%Burberry Group (BRBY) 1,092.00p -6.98%Cairn Energy (CNE) 265.00p -5.59%Aviva (AV.) 288.60p -5.50%Man Group (EMG) 160.80p -4.57%Weir Group (WEIR) 1,479.00p -4.52%GKN (GKN) 168.00p -4.49%Standard Chartered (STAN) 1,229.50p -4.47%Smiths Group (SMIN) 955.00p -4.45%Wolseley (WOS) 1,536.00p -4.42%