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FTSE takes dive amid Greece crisis

Published 07/07/2015

German chancellor Angela Merkel and French president Francois Hollande at talks over the Greece crisis (PA)
German chancellor Angela Merkel and French president Francois Hollande at talks over the Greece crisis (PA)

Some £26 billion was wiped off the value of Britain's top companies today as Greece engaged in high-stakes brinkmanship with the other eurozone states.

With hopes of a deal fading, investors took fright across the continent - sending the FTSE 100 index down more than 100 points.

The fall came after the new Greek finance minister Euclid Tsakalotos failed to present any new proposals to an emergency summit of the currency group in Brussels.

The eurozone's top official, Jeroen Dijsselbloem, said he now expected Athens to make a formal request for new assistance from the European Stability Mechanism (ESM) bailout fund tomorrow morning.

But he also delivered a stark warning that time is running out before the country suffers a catastrophic banking meltdown, which could force its exit from the currency union.

"The first step will be that the Greek government will send the eurogroup a new request, a new request letter for ESM support and as soon as this comes in - hopefully already tomorrow morning - we will have another eurogroup conference call to formally start the process of dealing with this request," the president told reporters after the summit.

"I will first ask the institutions to look at the financial situation in Greece, their finances and debt sustainability, and then the institutions will come back to us and we will see if we can formally start the negotiations.

"All this has to be done in a matter of days. We have very little time, as you are all aware."

Amid growing signs that counterparts including powerful German Chancellor Angela Merkel are losing patience with his manoeuvring, Greek president Alexis Tsipras is due to make a direct appeal to the European Parliament tomorrow.

Mrs Merkel has insisted the door is still open to re-starting negotiations, but any new plan must be "serious and credible".

The European Central Bank (ECB) has tightened the screw on Greece's embattled banks - which had been due to reopen today but will now remain shut until at least Thursday - by raising the amount of collateral they must provide as security against emergency lending.

Chancellor George Osborne, who is unveiling his first Tory-only Budget tomorrow, has warned that the UK will not escape the fallout despite remaining outside the eurozone.

And the FTSE 100 Index, which is trading at its lowest level since January, fell by more than 100 points to 6,432 - wiping £26 billion off the value of its constituent companies.

It had seen a more muted reaction to the weekend's Greek referendum result in the previous session with a fall of 50 points, but latest developments from talks in Brussels pushed the top-flight down more sharply.

The value of the top 100 UK-listed firms has now dropped by £39 billion since the close at the end of last week.

Germany's Dax and France's Cac 40 were also hit today, each shedding around 2%.

With limits imposed on withdrawals, British tourists have been warned to take sufficient cash to cover expected costs and emergencies and to ensure they have supplies of their usual prescription medicines in case of shortages.

Pensions continue to be paid as normal to expat Britons living in Greece and measures have been put in place to support British firms facing cashflow problems as a result of capital controls imposed by the Greek government.

Staffing levels have been increased at the UK embassy in Athens, and more consular staff have been deployed on the islands of Crete, Corfu, Rhodes and Zakynthos to help British nationals.

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