London close: Stocks slip as Greece heads for new elections

15th May 2012 16:30

- Greece fails to form coalition- Eurozone GDP unchanged in first quarter- IAG falls after downgrade, miners track metals prices lowerLondon's blue chip index fell sharply for a second straight day on Tuesday as it was revealed that Greek leaders failed to form a coalition, meaning that the country will have to hold a new round of elections.Evangelos Venizelos, leader of the Socialist Pasok party, stated that he was unable to convince radical left-wing coalition Syriza or the Democratic Left to reach an agreement. "The country is once again headed to elections in a few days under adverse conditions," Venizelos is reported to have said."At this stage, it is extremely difficult to predict a potential outcome for the new elections," said analyst Faboi Fois from Barclays Capital. "It is possible that the elections will be seen as a referendum on Greece's membership of the euro area," he said, adding that the latest polls suggest that most Greeks still want the country to stay in the euro area.In other news, gross domestic product (GDP) for the Eurozone was unchanged over the first quarter of 2012, according to the latest estimates from Eurostat. This flat reading was better than the 0.3% contraction seen in the fourth quarter of 2011, meaning that the single-currency region narrowly avoided recession. However, the figures once again masked a two-speed economy. German GDP increased by 0.5% over the first three months of the year, much better than the 0.1% gain expected by the consensus and the 0.2% contraction in the fourth quarter of 2011. French GDP was flat in the first quarter, in line with consensus forecasts, however fourth-quarter growth was revised down from 0.2% to 0.1%. Italy saw a 0.8% contraction, Spanish GDP fell 0.3%, while Holland shrank by 0.2%. In domestic news, the UK's trade deficit closed slightly in March, as stronger exports to the US, China and Russia made up for flat trade with Europe. The trade deficit in goods and services was £2.7bn, compared to £2.9bn the month before, according to the Office for National Statistics. FTSE 100: IAG and mining stocks lead the declineBA owner IAG dropped after JP Morgan downgraded its rating on the stock from overweight to neutral, saying it sees "headwinds from weaker Spanish trading, coupled with higher-than-expected bmi losses, and an overhang from Bankia" (shareholder in IAG).Meanwhile, mining stocks continue to bear the brunt of recent sell-offs on the back of concerns over the ongoing Eurozone debt crisis as metals prices come under more pressure. Vedanta Resources, Rio Tinto, ENRC and Kazakhmys were among the worst performers. The latter was weighed down by a target price cut from UBS as it slashed the company's earnings per share forecasts for 2012-14 by 10-20%.International security solutions firm G4S was a high riser despite saying that profits in the first three months of 2012 were, as expected, at similar levels to the corresponding period of last year. Looking forward, the company said organic growth has continued to improve in developed markets and remains strong in developing markets, and theorganic growth rate is expected to continue to improve during 2012. Telecoms titan BT Group was lifted by an Espirito Santo upgrade today. The Portuguese broker has lifted its rating on the stock from sell to neutral following last week's full-year results, highlighting the margin performance at BT's global services division and the low costs associated with its fibre broadband rollout.Medical devices group Smiths Group was in demand after saying that full-year expectations remain in line with earlier guidance. Both sales and underlying headline operating profit in the nine months to April 28th were ahead of last year. FTSE 250: Renishaw jumps, sees signs of electronics upturn Precision tool maker Renishaw said despite continuing global macroeconomic headwinds, it has seen good growth over the year to date and has started to see signs of an upturn in the electronics market. Shares surged early on. ??Also wanted was Babcock, the engineering support services company, as it said it expects earnings in the current year to be ahead of previous expectations, thanks to its bulging order book. ??FTSE 100 - RisersCarnival (CCL) 2,034.00p +3.41%G4S (GFS) 275.20p +3.15%Polymetal International (POLY) 808.50p +1.76%Smiths Group (SMIN) 1,041.00p +1.46%Evraz (EVR) 328.20p +1.42%BT Group (BT.A) 207.30p +1.17%Weir Group (WEIR) 1,521.00p +0.73%Kingfisher (KGF) 285.10p +0.71%Aggreko (AGK) 2,175.00p +0.60%Associated British Foods (ABF) 1,220.00p +0.58%FTSE 100 - FallersInternational Consolidated Airlines Group SA (CDI) (IAG) 149.90p -5.96%Kazakhmys (KAZ) 707.00p -4.07%Vedanta Resources (VED) 1,013.00p -3.80%Man Group (EMG) 79.85p -3.80%Rio Tinto (RIO) 2,953.50p -2.94%Experian (EXPN) 894.00p -2.93%Resolution Ltd. (RSL) 205.50p -2.88%Aviva (AV.) 282.40p -2.86%ICAP (IAP) 335.30p -2.70%IMI (IMI) 881.00p -2.60%FTSE 250 - RisersRenishaw (RSW) 1,467.00p +9.40%Babcock International Group (BAB) 868.50p +8.70%Soco International (SIA) 264.80p +3.88%Home Retail Group (HOME) 81.30p +3.50%Supergroup (SGP) 330.00p +2.96%Greggs (GRG) 496.00p +1.99%Laird (LRD) 187.20p +1.68%Devro (DVO) 299.90p +1.66%Fidelity China Special Situations (FCSS) 76.75p +1.59%Daejan Holdings (DJAN) 3,084.00p +1.45%FTSE 250 - FallersAquarius Platinum Ltd. (AQP) 93.75p -7.64%Dixons Retail (DXNS) 14.80p -7.21%New World Resources A Shares (NWR) 331.40p -6.57%Taylor Wimpey (TW.) 41.95p -6.11%Lonmin (LMI) 805.00p -5.74%Petra Diamonds Ltd.(DI) (PDL) 133.00p -5.47%Petropavlovsk (POG) 390.50p -5.24%Spirax-Sarco Engineering (SPX) 2,050.00p -5.05%Logica (LOG) 66.40p -4.80%Barratt Developments (BDEV) 118.10p -4.76%BC