FTSE rallies 0.3% but traders cautious ahead of Greece austerity vote
City Index June 27, 2011 2:58 PM
<p>UK stocks saw gains, with buying in the heavyweight mining, oil and banking sectors enough to lift the FTSE 100 Index over 20 points on […]</p>
UK stocks saw gains, with buying in the heavyweight mining, oil and banking sectors enough to lift the FTSE 100 Index over 20 points on Monday.
The FTSE 100 rallied 30 points in the last hour of trading to finish the day higher by 0.3%, led by strength in the banking sector, whilst pharmaceutical firms weighed. Traders were however cautious on the day, watching developments in Europe as Greece enters a pivotal few days as the PM attempts to pass through a €28 billion austerity package.
Make no mistake; this week is all about Greece for European investors, with the effects of the vote on the new austerity package likely to be felt widely. A successful passing of the package in parliament is likely to satisfy EU and IMF demands, paving the way for the second tranche of loans and a new bailout aimed to stave Greece from a default. However, credit ratings agencies have already indicated that any restructuring of Greek debt, including deals with private bondholders in terms of extensions, is likely to be viewed as a default. As such, the uncertainty of Greece debt and contagion affects is unlikely to go away with a successful passing of the new Greek austerity package.
It was pharmaceutical firms that did however weigh on the FTSE 100, with shares of Astrazeneca falling 1% after on concerns over its diabetes drug. Recent data has shown that its drug dapagliflozin is associated with breast and bladder cancer, as well as some cases of infection. The findings came from a late stage clinical trial and serves a big blow to the firm’s hopes to attain FDA approval to market the drug in the retail space.
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