Reuters: Hot Stocks: UK shares weak as Greek debt meeting eyed

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UK shares weak as Greek debt meeting eyed Nov 26th 2012, 12:36 Mon Nov 26, 2012 7:36am EST * FTSE 100 sheds 0.5 percent after strong gains last week * Volumes modest ahead of Greek debt meeting outcome * Barclays falls 4 pct as Qatar cashes in warrants By Jon Hopkins LONDON, Nov 26 (Reuters) - Britain's top shares were lower on Monday, reversing some of last week's advance, with investors watching the latest euro zone attempt to agree another bailout payment for Greece. The index was weighed by a 4.1 percent drop from Barclays after top shareholder Qatar Holdings sold its remaining warrants in the UK bank, a move which will lead to the sale of up to 303.3 million Barclays shares. Euro zone officials have said ministers are likely to conclude a deal for Greece on Monday allowing the payout of the latest tranche of European and IMF aid for Athens, although they still have to bridge a gap in its debt-cutting plan. "I think Greece will be given the next tranche of the bailout but additional conditions might be attached to the loan. After all, without the 31 billion euros ($40 billion) in aid the nation will go bust, which could trigger a wave of panic selling," said David Madden, Market Analyst at IG. However, even if the Greek problem is smoothed over again, any relief rally could be curtailed by alarm about the U.S. 'fiscal cliff' of automatic tax increases and government spending cuts scheduled to come into force on Jan. 1, raising the risk of recession in the world's biggest economy. Re-elected Democrat President Barrack Obama is currently negotiating with a Republican-dominated Congress to find a compromise. "While both main parties are trying to portray themselves as committed to working together for the common good, as expected they are far from agreement meaning discussions are likely to go on for weeks to come, creating the uncertainty the markets loath," said Craig Erlam, market strategist at Alpari (UK). Overall, financials were the weakest blue chip sectors, knocking over 11 points off the FTSE 100 index. Aside from the big drop by Barclays, Royal Bank of Scotland also weighed on the index, down 2.4 percent on concerns that it could receive separate fines for its alleged involvement in the Libor-fixing controversy, one from the UK's Financial Services Authority and one from U.S. regulators, according to the Sunday Telegraph. Risk-sensitive commodity stocks were also weak, with miners and energy stocks retreating after making gains last week, together accounting for over 7 points of the FTSE 100's declines. By 1200 GMT, the FTSE 100 index was down 30.60 points, or 0.5 percent, at 5,788.64. Volume was relatively thin pending the outcome of the euro zone meeting, at 41 percent of its average 90-day volume. However, last week the index posted the biggest weekly gains of the year and notched up five consecutive sessions of rises for only the third time this year on optimism over a Greek debt deal, and Baring fund manager Andrew Cole remained upbeat. "We think concerns about the global economy are troughing, that the UK market is nicely exposed to that, and the market looks pretty cheap relative. We find the UK market pretty attractive today," said Cole of Baring Asset Management, which has around 31 billion pounds ($50 billion) of assets under management. Among the blue chip gainers, stocks perceived as more defensive found support, led by the tobacco, utilities, and food products sectors. Real estate firm British Land was also in demand, adding 0.7 percent as UBS upgraded its rating to "buy" from "neutral" citing a lower risk profile and growing earnings potential for its change of stance. ($1 = 0.7717 euros) ($1 = 0.6246 British pounds) (Reporting by Jon Hopkins; Editing by Ruth Pitchford) Link this Share this Digg this Email Reprints

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