FTSE finishes week lower on China data and more Greek woes

The FTSE 100 finished the week lower with the UK Index losing 0.7% as concerns escalated over the political impasse in Athens towards meeting the Troika’s additional austerity demands, whilst weaker than expected import data from China highlighted concerns over a slowdown in the worlds fastest growing economy.

The FTSE 100 closed down by 0.7% on Friday to post the first weekly trading loss in four, weighed down by losses in heavyweight mining and financial stocks.

The original deal between Greek political leaders yesterday has been quickly scuppered by additional austerity terms handed to them by the Troika (EU, ECB and IMF), as part of the second bailout package. This has put the cat amongst the pigeons when the situation looked to potentially have finally moved towards the finish line yesterday.

Strong rhetoric today from several high ranking Greek politicians in voicing their opposition to some of these new conditions, including that of the head of the far right LAOS party, who indicated that they would vote against the austerity package in parliament, sent stocks lower. The anti austerity rhetoric was quickly followed up by several resignations from senior political positions within the coalition government, further destabilising the political situation in Athens at a time when this is the last thing the Troika and investors want to see.

Without agreeing to the new bailout terms, Greece will default and the volatile relationship between Greece and the Troika, which the past few weeks has epitomised, has kept undertones of uncertainty in the markets and has triggered investors into downsizing their positions in financial stocks ahead of the weekend break, which could see yet more turns and twists in the Greek situation.

That said, the coalition party retains a strong majority in Parliament and so as such, it would still be a shock if austerity terms did not pass through. Though considering how much disappointment the markets have experienced from Greece over the past two years, anything is possible.

It is this uncertainty that is helping to convince investors to reduce their risk exposures into the market close ahead of the weekend.

Weaker than expected Chinese data also weighed on heavyweight mining stocks on the FTSE 100, contributing to much of the drag on the UK Index.

Chinese imports last month fell 15.3%, the most since August 2009. Exports also fell 0.5%. This has escalated fears of slowing metal demand as China’s economy faces a slowdown and this has triggered investors into selling some of their holdings in mining stocks such as Kazakhmys and Anglo American. The FTSE 350 mining sector fell by 2.1% in trading as a result.