UK stocks: FTSE 100 down 1.9%

Britain's FTSE 100 share index fell on Monday morning after finance ministers failed to make headway on the euro zone debt crisis

Britain’s top shares gave back a large chunk of last week’s gain in less than half a day’s trade on Monday after fresh evidence of the political disunity fuelling the region’s debt crisis sent bank stocks tumbling.

Another election defeat in Germany for the ruling coalition, policy division between Europe and the U.S. and lack of action at a finance minister meeting, combined with fears Athens will fail to cut deep enough to secure fresh funds, fuelled a broad-based slide.

While Greece’s finance minister reiterated his belief the next tranche of bailout funds would be released, international lenders ratcheted up the pressure ahead of a conference call between the parties later on Monday.

The net effect was that, We are pretty much in the same situation that we were before, with no concrete plans on the table in terms of how the debt situation is going to unravel, Richard Hunter, head of equities at Hargreaves Lansdown, said.

Credit markets are pricing in a 90 percent chance of Greek default while a recent Reuters poll of economists put it at 65 percent. Greece needs the next, 8-billion euro ($11 billion) tranche of funds by October to avoid a default.

It’s risk-off, after everyone thought it was OK to come out of hiding last week, a London-based sales trader at a UK brokerage said, referring to last week’s four-session rally. People are asking where we go from here, again.

All you got from the [weekend finance ministers’] meeting was discord between Europe and the US, and they pushed back the decision on Greece for another two weeks.


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