Euro declines as Greek bailout negotiations stall

The euro slumped today as eurozone finance ministers postponed Greece's €12bn bailout package until the country implements tougher austerity measures to curb its soaring deficit.

In early trading the currency slipped 0.27% against the pound to £0.88 on renewed default fears.

Eurozone ministers stressed Greece is still on course to receive the next tranche of a €110bn bailout package, providing the government can agree on a €28bn austerity package.

However, with Greek prime minister George Papandreou's Socialist party holding a marginal six-seat majority and the Conservative opposition strongly against the spending cuts, the Cabinet may not back the proposals.

The decision to stall the bailout has reignited fears the country is tilting towards a sovereign debt default, with all the major indices posting heavy losses.

The FTSE 100 has slipped below the 5,700 mark, with London's leading index posting declines of 0.64% or 36.81 points to 5,678 at 9am.

However, in Asia the Nikkei advanced 0.03% to 9,354, with Toyota among stocks seeing positive newsflow.