With the heavyweight banking sector extending its earlier losses, the Footsie was trading close to its lowest levels of the day by Thursday lunchtime ahead of the two-day EU summit which begins this afternoon.
The summit of the European Council will start this afternoon at 14:00 _London time) and last until tomorrow; European leaders will be looking to tackle the sovereign debt crisis as they work towards a plan for tighter integration.
"Stocks are trading lower this morning as we get closer to a summit in which expectations are incredibly low. In the past, there's been a lot of optimism leading into these summits, sending stocks and other risky assets higher. With so much experience now of these summits producing nothing, a wait and see approach is now being taken," said analyst Craig Erlam from Alpari.
All signs suggest that France, Italy and Spain have organised their game play to fight for growth, while their respective leaders - François Hollande, Mario Monti, and Mariano Rajoy - continue to push for the famous 'eurobonds'. However, on the opposite team, German Chancellor Angela Merkel continues to shout "nein" to the idea of jointly-issued European debt.
In domestic news, UK gross domestic product (GDP) decreased at a 0.3% pace in the first quarter of 2012, in line with the preliminary estimate, according to data published by the Office for National Statistics (ONS).
UK house prices fell by 0.6% month-on-month in June to £165,738, according to mortgage lender Nationwide, so that prices are now 1.5% below where they were a year ago and at their lowest level since August 2009.
FTSE 100: Barclays plummets on Libor scandal
Shares in Barclays were under heavy selling pressure after the banking group was found guilty of 'market manipulation' into interbank lending rates, prompting calls for the resignation of Chief Executive Officer Bob DIamond. Several other banks, including HSBC, Royal Bank of Scotland (RBS) and Lloyds, are also facing an inquiry into rigged Libor manipulation, it has been reported.
Barclays was over 9% lower by midday, while RBS, HSBC and Lloyds were also registering steep losses. Lloyds announced last night that it has agreed on the terms of the 632 branch-network sale, otherwise known as Project Verde, to the Co-op.
Mining stocks were also out of favour with ENRC, Vedanta, Xstrata and Glencore firmly in the red. Potential merger partners Xstrata and Glencore were unwanted on the back of rumours that Glencore could walk away from the possible combination after Xstrata shareholder Qatar Holdings demanded a high exchange ratio.
Meanwhile, Polymetal was suffering from a downgrade by UBS from 'buy' to 'neutral' due to the "recent strong share price performance and weaker silver prices".
Consumer products group Reckitt Benckiser fell after Credit Suisse downgraded the stock to 'neutral' and cut its target price from 3,800p to 3,500p. Engineer IMI was lower after UBS cut its target price by 100p and reduced its earnings estimates for 2012 and 2013. "We expect negative organic growth in H1 with the decline accelerating into the second half," the broker said.
Steel giant Evraz was extending losses made yesterday when German peer Salzgitter gave a gloomy outlook for the industry/ Goldman Sachs slashed its target price for Evraz this morning from 700p to just 400p, but kept a 'buy' rating.
FTSE 250: Labrokes leads the fallers after profit warning
Betting firm Ladbrokes dropped after it issued a profit warning for its Digital division, blaming increased technology investment, marketing spend and a poor sportsbook margin in the second quarter of 2012. Peel Hunt downgraded the stock from 'buy' to 'hold' this morning.
Hotels group Millennium & Copthorne was a high riser after Morgan Stanley upgraded the stock to 'overweight' and lifted its target price from 540p to 630p.
FTSE 100 - Risers
United Utilities Group (UU.) 668.00p +1.37%
AstraZeneca (AZN) 2,833.00p +1.21%
Severn Trent (SVT) 1,639.00p +0.99%
Resolution Ltd. (RSL) 191.50p +0.63%
Aggreko (AGK) 1,972.00p +0.56%
Serco Group (SRP) 528.50p +0.48%
Ashmore Group (ASHM) 336.00p +0.48%
Reed Elsevier (REL) 498.10p +0.38%
British Sky Broadcasting Group (BSY) 684.00p +0.37%
House builders and construction stocks were performing well on Tuesday after the British Bankers' Association revealed that mortgage approvals for house purchase hit a 16-month high in May of 36,102. This was up from a revised 32,952 the month before, well ahead of the 33,200 consensus forecast and up 11 per cent year on year. Ashtead, Balfour Beatty and Barratt Developments were among the best performers this afternoon. [25 Jun '13]
The FTSE 100 rebounded strongly on Tuesday morning after falling to a fresh five-month low the day before, as policymakers from China and the US spoke out to downplay fears that have sparked market volatility over recent weeks. [25 Jun '13]
African Barrick Gold: Morgan Stanley reduces target price from 200p to 140p, while leaving its equal-weight rating unaltered. Deutsche Bank lowers target price from 153p to 137p leaving its hold recommendation unchanged. [25 Jun '13]
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