- Glencore and Xstrata merger may face regulatory probe.
- Board room bust-up at Bumi unnerves Nomura.
- Snow fun's no fun for airlines.

As the market waited - once again - for Greece to agree on a package of austerity measures that will secure another tranche of aid, investors took the precaution of reducing their exposure to equities.

After a meeting last night between the three parties of Greece's coalition government, Prime Minister Lucas Papademos announced that they had agreed on "basic issues". However, it seems that the two smaller party heads remain opposed to excessive austerity measures.

Negotiations continue to crawl forward with Greek finance minister Evangelos Venizelos saying: "The gap between the successful completion of procedures and a deadlock, which could be accidental or due to a misunderstanding, is very small. We are on the razor's edge," he said.

In a report released today from its Beijing office, the International Monetary Fund (IMF) warned that the European debt crisis could cut China's growth in half. In its China Economic Outlook, the IMF noted that the "global recovery is threatened by intensifying strains in the euro area and fragilities elsewhere." The IMF insists that China's growth rate would "drop abruptly if the euro area experiences a sharp recession". According to IMF calculations, this would translate to a fall of "around 4 percentage points" from the currently expected 8.25% for this year.

MINERS DRAG FOOTSIE LOWER

Glencore International and Xstrata were among the worst performers, pulling back after last week's strong rise - the two commodities giants are currently in talks regarding a merger, and there are some who fear that the merger could face regulatory obstacles in Europe.

US broker Jefferies believes that the potential combination would be a "win/win" for both parties and a "game changer for the mining sector. "We do expect the Glencore/Xstrata merger to happen, and we would consider this to be an industry transforming transaction in light of the potential for a subsequent acceleration of industry consolidation," analysts said.

Nevertheless, the mining sector was broadly lower, with falling metals prices and the IMF's outlook on China doing it bit to provide downward pressure. Vedanta Resources and Antofagasta were firmly in the red.

However, Randgold Resources was bucking the trend after the west Africa-focused gold miner saw sales in the final three months of last year rise 1.3% over the the previous quarter. Total sales for the three months to the end of December were $314m compared to $310m between July and September.

Insurance group Admiral was a heavy faller, pulling back after Friday's strong rise following the announcement that it had extended its existing UK car insurance reinsurance partnerships with Hannover Re, Mapfre Re, New Re and Swiss Re until 2014. Nevertheless, shares are still some 12% up over the last week.

Airlines was were under pressure as the weekend's snow storm across the UK forced cancellations at many airports. British Airways owner International Consolidated Airlines, easyJet and Ryanair were in the red in the opening minutes.

SECOND TIER FLAT

While most blue-chips retreated, the situation was more mixed among the FTSE 250 universe.

Budget airline easyJet was lower, with the weather not helping, after revealing that passenger numbers nudged 0.4% lower in January. While the load factor improved slightly to 81.9%, it was well under the 12-month rolling average load factor of 87.7%.

Natural resources royalties company Anglo Pacific rose after saying it has agreed to a proposal to buy 50% of Red Rock Resources' iron ore royalty in the Mount Ida magnetite project, western Australia.

Oil and gas exploration and production firm Premier Oil was in the red after reporting that the East Fyne Appraisal well in the North Sea, which it operates, is being plugged and abandoned.

Northern Russia-focused oil group Exillon Energy saw shares edge higher after agreeing a new $100m loan facility, doubling the size of its previous credit line. The money will be used to finance drilling and infrastructure work at its two main sites in Timan-Pechora and West Siberia.

Business events organiser and publisher UBM fell after selling off its UK agriculture and medical general practitioner magazines, representing a "further significant step in the transformation of UBM into a set of Events and other B2B marketing, communications, and data services businesses."

The outbreak of a board room battle at Bumi has prompted Nomura to downgrade the stock from "buy" to "neutral", while the price target has been chopped to £10 from £14.

Turning to other broker comment, trendy fashion-wear Supergroup was wanted after Oriel upgraded the stock from "hold" to "buy", saying the firm's warehousing problems appear to be behind it.


FTSE 100 - Risers
Cairn Energy (CNE) 344.90p +5.49%
Lloyds Banking Group (LLOY) 35.30p +2.65%
Randgold Resources Ltd. (RRS) 7,565.00p +2.23%
Vodafone Group (VOD) 177.85p +1.57%
Marks & Spencer Group (MKS) 345.80p +1.38%
BP (BP.) 489.55p +1.04%
Tate & Lyle (TATE) 687.50p +1.03%
BT Group (BT.A) 216.00p +0.93%
Shire Plc (SHP) 2,129.00p +0.90%
Diageo (DGE) 1,474.00p +0.89%

FTSE 100 - Fallers
Glencore International (GLEN) 460.75p -4.52%
Admiral Group (ADM) 998.50p -3.81%
Vedanta Resources (VED) 1,317.00p -3.09%
Antofagasta (ANTO) 1,363.00p -2.57%
Barclays (BARC) 231.40p -2.55%
Reckitt Benckiser Group (RB.) 3,411.00p -2.18%
ITV (ITV) 77.70p -2.08%
Kazakhmys (KAZ) 1,190.00p -1.98%
Old Mutual (OML) 154.70p -1.96%
ARM Holdings (ARM) 577.00p -1.87%

FTSE 250 - Risers
Oxford Instruments (OXIG) 1,083.00p +8.84%
New World Resources A Shares (NWR) 540.00p +6.51%
Supergroup (SGP) 703.00p +6.19%
Gem Diamonds Ltd. (DI) (GEMD) 234.40p +5.49%
RPS Group (RPS) 228.40p +4.05%
Rank Group (RNK) 140.00p +3.78%
Domino Printing Sciences (DNO) 619.50p +3.68%
Synergy Health (SYR) 887.50p +3.62%
Anglo Pacific Group (APF) 315.60p +3.48%
Talvivaara Mining Company (TALV) 346.70p +3.46%

FTSE 250 - Fallers
Bumi (BUMI) 795.00p -6.47%
Shanks Group (SKS) 105.10p -4.89%
Petropavlovsk (POG) 772.00p -4.51%
Ocado Group (OCDO) 103.50p -4.43%
Hays (HAS) 82.90p -3.32%
Telecom Plus (TEP) 654.50p -3.11%
Chemring Group (CHG) 412.70p -2.89%
Home Retail Group (HOME) 114.50p -2.22%
Lonmin (LMI) 1,080.00p -2.09%
CSR (CSR) 234.20p -2.01%


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Related share prices
UBM (UBM) share price
Antofagasta (ANTO) share price
Anglo Pacific Group (APF) share price
Premier Oil (PMO) share price
Randgold Resources Ltd. (RRS) share price
Ryanair Holdings (RYA) share price
easyJet (EZJ) share price
Xstrata (XTA) share price
Vedanta Resources (VED) share price
Admiral Group (ADM) share price
Supergroup (SGP) share price
Exillon Energy (EXI) share price
International Consolidated Airlines Group SA (CDI) (IAG) share price
Glencore International (GLEN) share price
Bumi (BUMI) share price