By This Is Money Reporters
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16:00
The FTSE 100 is down 77.08 points to 5,446,84.
Sterling is hovering near a one-month high against the euro after a German official quashed any hopes of quick decisions at a European Union summit, comments which dragged the pound to a two-week low against the safe-haven dollar.
Data confirming the current UK recession is deeper than first thought also weighed down the pound against the dollar. GDP was confirmed to have fallen 0.3 per cent in the first three months of the year and it contracted by more than previously thought in the fourth quarter of 2011.
Smiles all round: French President Francois Holland welcomes German Chancellor Angela Merkel at the Elysee Palace yesterday
German leaders have consistently played down expectations for a two-day summit that started today. Some in the market were hoping that Europe's paymaster and largest economy would be more amenable to a banking union or some form of intervention to drive down borrowing costs for peripheral euro zone countries.
But a German government source told Reuters on Thursday the summit would produce no detailed decisions and that it will take time to resolve the bloc's debt crisis, causing traders to rush to sell the euro and buy safe havens like the dollar and the yen.
At the same time, Spanish 10-year yields rose to trade above 7 per cent, a level considered unsustainable, while Italian 10-year borrowing costs hit a six-month high of 6.19 per cent at an auction.
Bank shares were pummeled by the rate-rigging scandal (more on this below). Even market giant HSBC, which is being investigated, registered a drop of nearly 4 per cent to 551.65p. That wiped billions of its £102billion total value.
12:15
Barclays shares dropped 9 per cent today as it continued to suffer fall-out from the rate-rigging scandal that has rocked the banking industry.
The bank was fined £290 million by US and UK regulators but there are fears this could be dwarfed by the cost of lawsuits, which could run into billions of US dollars, and pushed shares down 18.8p at 177.3p. Read more here.
The wider FTSE 100 Index was 52.2 points lower at 5471.9, as Barclays was joined by other banks at the top of the fallers' board.
Royal Bank of Scotland was down 15.8p at 217.3p while Lloyds was off 1.9p at 29.3p amid fears other lenders will be engulfed in the scandal.
Meanwhile, low expectations over the outcome of this week's EU summit in Brussels depressed sentiment.
Eve-of-summit talks between France and Germany failed to bridge the gulf between austerity and growth, while Angela Merkel continued to resist the ‘mutualisation’ of eurozone debt, which would pool the debt burden.
Spain's implied borrowing costs pushed back towards the 7 per cent bail-out zone amid fears that the summit will fail to tackle the crisis.
Chris Beauchamp, market analyst at IG Index, said: ‘A pre-summit meeting between the two big beasts of the eurozone, Germany and France, failed to produce anything of substance, and it will probably be the same story with this get-together.’
Cillit Bang maker Reckitt Benckiser was among the other big fallers, off 88.5p at 3290.5p, after Credit Suisse downgraded the stock amid concerns about its prospects in developed markets such as Europe.
Department store Debenhams was nearly 2 per cent lower in the second tier despite reporting a sharp improvement in like-for-like sales for the last quarter.
The gain was driven by promotional activity around key events such as Easter and the Diamond Jubilee and meant margins were lower than a year ago. Shares were 1.6p lower at 81.7p.
But Ladbrokes was the FTSE 250 Index's biggest faller, down 11 per cent, after it warned digital profits for the first half of 2012 would be 50 per cent lower after punters failed to back England during Euro 2012 and its new website was delayed.
It said a better performance at its 2,000-strong store estate left it on-track to meet City expectations but shares fell 18.5p to 155.4p.
Pub company Greene King was slightly higher after it reported an 8.6 per cent rise in underlying profits to £152 million, driven by 17 per cent growth in food sales.
The results were better than City expectations but the company warned consumers would continue to be under pressure this year. Shares rose 0.8p to 532.3p.
09:15
Low expectations over the outcome of this week's EU summit in Brussels kept investors on the sidelines of the London market today.
Eve-of-summit talks between France and Germany failed to bridge the gulf between austerity and growth, while Angela Merkel continues to resist ‘mutualisation’ of eurozone debt, which would pool the debt burden.
The FTSE 100 Index was 35.8 points lower at 5487.5, with banks among the sectors suffering after yesterday's damaging revelations about interest rate rigging.
Barclays was down 2 per cent or 4.8p to 191.25p as pressure mounted on chief executive Bob Diamond to step down in the wake of penalties worth £290 million for his bank.
HSBC was off 8.1p at 565p, while Lloyds Banking Group dropped 0.4p to 30.8p and Royal Bank of Scotland eased 3.2p to 229.9p.
Cillit Bang maker Reckitt Benckiser was another big faller, off 85p at 3292p after Credit Suisse downgraded the stock amid concerns about its prospects in developed markets such as Europe.
Department store Debenhams was nearly 2 per cent lower despite reporting a sharp improvement in like-for-like sales for the last quarter.
The gain was driven by promotional activity around key events such as Easter and the Diamond Jubilee and meant margins were lower than a year ago. Shares were 1.35p lower at 81.9p.
Revised GDP figures released this morning by the ONS revealed the UK's recession is worse than previously thought. GDP fell by 0.4 per cent between October and December last year, compared with a previous estimate of 0.3 per cent. Read more here.
08:15
Britain's top share index index opened modestly higher in early trade, consolidating a strong, late bounce in the previous session as investors focus on a two-day summit in Brussels that could shape the eurozone's future.
German Chancellor Angela Merkel will pit herself against France and Italy at the summit starting today, insisting they must put the bloc's fundamental problems ahead of pleas for emergency action.
Gary Jenkins of Swordfish Research said: 'Who knows what they will come up with but there has to be something or they risk a bloodbath in the bond market next week.'
The FTSE 100 index is up 2.33 points, or 0.1 per cent, at 5,526.25 points, having jumped 1.4 per cent yesterday boosted by above-forecast U.S. durable goods orders and pending homes sales data which eased concerns over the global growth outlook.
Energy stocks and miners provided the main underlying support for the blue chips, reflecting firmer commodity prices after Wednesday's U.S. data boosted demand hopes.
Banks were the main drag on sentiment, retreating after strong gains in the previous session, led by global heavyweight HSBC, off 0.6 per cent.
Household products firm Reckitt Benckiser was the top individual FTSE faller, down 1.9 per cent as Credit Suisse downgraded its rating to ‘neutral’.Â
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