Greek debt worries leave Footsie mired in the red

Early increases for airline and travel stocks after Britain's airspace reopened following the volcanic ash cloud proved short-lived as the Footsie closed 60.26 points lower at 5723.43.

Indices across Europe also fell on the Greek concerns, with the Cac 40 in France down 0.9 per cent and Germany's Dax off 0.5 per cent.

The debt-laden Greek government began detailed talks over a financial bailout as its borrowing costs reached a record high and the International Monetary Fund said the woes could cast a cloud over European recovery.

Nick Serff, market analyst at City Index, said yesterday: "The market is clearly still feeling a bit jittery about the Greece debt situation, particularly with Greece talking to the EU and IMF today regarding the economic plan.

"We have seen further selling of the euro, with Greek bond yields continuing to blow-out emphasising the nervousness that remains regarding the eurozone outlook."

As the Greek debt issue hung over the European currency, the pound rose to 1.15 against the euro and 1.53 against the dollar.

US stocks drifted lower on losses by healthcare and energy stocks, offsetting strong gains by blue chips Apple and Morgan Stanley.

Healthcare shares pulled down the market as Gilead Sciences dipped 10.5 per cent to $40.35 a day after cutting its full-year sales outlook.

"There is a rotation of money flow from healthcare stocks to technology, supported by strong earnings from the sector, including Apple," said Arthur Hogan, chief market analyst at Jefferies & Co in New York.

In the FTSE 100, pressure in the mining sector came after traders continued to fret about demand prospects and heavyweight firm BHP Billiton disappointed analysts with its latest production figures.

BHP fell 62p to 2118p, while many players also lost ground after turning ex-dividend, including Xstrata, off 52p to 1165p.

Retailers weighed on the index after Marks & Spencer shares were downgraded by Bank of America and investors worried that Tuesday's surprisingly large hike in inflation – to 3.4 per cent in March – raised the risk of a move up in interest rates, which could hit consumers' pockets.

M&S shares were down 111/2p to 3761/8p.

Elsewhere in the sector, shares in FTSE 250 Index listed Game Group slumped 12 per cent after it posted a 27 per cent fall in full-year profits and announced the departure of chief executive Lisa Morgan.

With trading conditions remaining tough, Game shares fell 12p to 891/4p and dragged rival HMV down by 43/8p to 805/8p.

Other ex-divi stocks meanwhile added to the pressure on London's Footsie, led by defence firm BAE Systems, which fell 185/8p to 3583/4p.

Travel-related shares struggled to make headway despite the resumption of flying. BA lost an earlier gain to stand 3/8p lower at 2331/2p, while easyJet added 41/2p to 484p.

Thomson holidays parent TUI Travel was off 1/4p to close at 2887/8p.

The biggest rise in the FTSE 100 Index came from chip designer ARM Holdings after strong results from technology giant Apple.

Cambridge-based ARM, whose chip designs are used in a raft of digital products such as mobile phone handsets and MP3 players, rose more than 3 per cent – up 71/2p to 2501/2p – after Apple shattered Wall Street hopes with second-quarter figures.

The biggest Footsie fallers of the session were BAE Systems and Xstrata.