FTSE drops 150 points on Greece, Portugal worries

The FTSE 100 dropped 150 points or 2.6% to finish at 5,604 whilst the DOW Jones industrials are currently down 101 at 11,101. The FTSE was hit hard as commodity related stocks took a dive as the "safe haven" U.S. dollar strengthened (e.g. BHP Billiton down 4.2%, Rio Tinto down 5.2%). The reason was debt rating agency S&P's cut to Greece’s credit rating to junk and also cut its rating on Portuguese government debt. 

Greece’s rating on the short-term debt is cut to BB+ from BBB+, while the long-term rating has been lowered to B from A-2. Both ratings are below what is considered “investment grade”. The outlook for Greece is also negative. Portuguese government debt was cut by two notches to A- FROM A+, saying the downgrade reflects “the amplified risks Portugal faces” and the outlook on its rating is negative.

FTSE 100 component Reckitt Benckiser also fell over 4% to £34.97 as the company issued a strong performance in Q1 with earnings rising 14% to £461 million but warned of the potential impact of generic Suboxone competition in the U.S. during 2010 (these risks have been highlighted in a previous Contrarian Investor UK story).