European debt worries weigh on FTSE

European debt worries weigh on FTSE

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The FTSE fell 16.4 points to close on Monday at 5985.7

Concerns over China’s plans for fiscal tightening and further uncertainty surrounding the European debt crisis has seen the FTSE 100 Index close in the red.

The London market dropped 16.4 points to 5985.7 as a meeting in Brussels got under way, where eurozone finance ministers locked horns over how to tackle the ongoing debt woes.

Concerns still remain over Portugal’s debt, despite a successful bond auction last week. Economists fear the country could follow Greece and Ireland and be forced to accept a bailout.

Barclays, which is heavily exposed to the Iberian peninsula, was down 4.4p at 306.6p, while Lloyds was down 1.5p at 68.1p and HSBC dropped 6.2p at 703.5p.

The uncertainty hit the euro as well, which was down against the pound at 1.19. Sterling was also up against the dollar at 1.59.

Miners added downward pressure as the sector was hit by worries over China’s decision to raise the reserve ratio requirement for its banks. Investors fear the fiscal tightening may curb the country’s demand for commodities.

Silver miner Fresnillo dropped more than 4%, losing 53p at 1439p, while copper miner Kazakhmys shed 24p at 1616p and Anglo-Australian group Rio Tinto lost 51.5p at 4384.5p.

BP saw a strong session after it unveiled a £10 billion deal with Russia’s Rosneft and takeover talk provided some cheer, but failed to lift the market out of the red.

Oil and gas exploration firms followed suit and posted gains, with Petrofac up 3p at 1618p and Centrica ahead 1.6p at 328.8p.

The biggest Footsie risers were Smiths Group up 99p at 1381p, GKN ahead 7.9p at 229.9p, Smith & Nephew up 24p at 709p and Capita Group ahead 20p at 717.5p. Meanwhile the biggest fallers were Autonomy down 78p at 1465p, Fresnillo off 53p at 1439p, ARM Holdings down 16p at 514.5p and Weir Group off 49p at 1690p.

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