London open: Banks take a hit after Moody's downgrade

Equities took a knock in early trading after Moody's dampened sentiment with the downgrade of 12 UK financial institutions. Stocks were expected to extend gains made over the last two days on the back of hopes for the struggling Eurozone.BANKS LEAD THE FALLERSThe banks were the worst performers on Friday morning after credit ratings agency Moody's issued a downbeat report on the UK financial sector. Lloyds TSB, Santander UK and the Co-Operative Bank were downgraded one notch, while Nationwide and RBS went down two levels. The reasoning for the downgrade was that Moody's wanted to reflect the ending of the UK government's implicit guarantee for all banks. It makes clear in its statement that the downgrade is not a comment on the stability of the British banking system as a whole. Unsurprisingly, RBS was the heavy faller. The group issued a statement this morning, saying, "We are disappointed that Moody's have not acknowledged the progress we have made in strengthening the bank's credit profile."Lloyds fell lower after its downgrade, while Barclays was in the red in sympathy.Retailers were performing better though, with Sainsbury, Kingfisher and Morrison making gains.Miners too were in demand. Xstrata rose after announcing that - through its Xstrata Coal subsidiary - it has agreed to expand its presence in the Peace River Coalfield, Canada. Fellow miner Vedanta was also firmer despite seeing a 36% decline in first half production of saleable iron ore.CENTRAL BANKS MOVE TO EASE ECONOMIC FEARSInvestors will be digesting the moves made yesterday by the Bank of England (BoE) and European Central Bank (ECB) to help the respective economies. The BoE said it would pump £75bn of new money into Britain, while the ECB announced several new measures aimed at the provision of liquidity to the financial system.In an interview with CNBC in which he defended his run as ECB president, Jean-Claude Trichet said, "The markets are expecting not only that the euro will be here in the next ten years, but that it will keep its value in the next ten years. The inflation expectations for the next ten years are fully in line with our definition of price stability."The last two days have seen impressive gains for the Footsie - jumping 7% from the closing price of 4,944 on Tuesday to 5,292 yesterday afternoon - on hopes that the European Union is planning for a co-ordinated recapitalisation of the continent's banks.However investors will be worried that the run could have run out of steam ahead of US payrolls data due before the opening bell in New York.HEAVY FALLS ON THE FTSE 250Premier Foods, the FTSE 250 food manufacturer which has been struggling with rising raw material costs, has admitted that its third quarter results are "significantly below our expectations". Shares dropped over 40% after the group warned that full-year trading profits will be below market expectations.Finnish nickel and zinc miner Talvivaara Mining lost over 20% of its market value after chief executive Pekka Pera resigned as the company goes into cash conservation mode. The company said that, in view of the current volatility and uncertainty in the commodity and financial markets, it has developed a revised operating plan and made the strategic decision to focus on maximising profitability of operations rather than the production volume over the remainder of 2011. BCFTSE 100 - RisersSainsbury (J) (SBRY) 297.10p +1.19%British Land Co (BLND) 508.00p +1.09%British American Tobacco (BATS) 2,839.50p +0.89%Land Securities Group (LAND) 693.00p +0.87%Kingfisher (KGF) 249.60p +0.85%BP (BP.) 395.90p +0.79%Serco Group (SRP) 509.50p +0.79%ICAP (IAP) 424.40p +0.74%Morrison (Wm) Supermarkets (MRW) 300.20p +0.67%G4S (GFS) 273.30p +0.63%FTSE 100 - FallersRoyal Bank of Scotland Group (RBS) 23.50p -3.53%Lloyds Banking Group (LLOY) 34.62p -3.47%Tullow Oil (TLW) 1,313.00p -2.74%Associated British Foods (ABF) 1,076.00p -2.09%Barclays (BARC) 164.90p -1.76%Antofagasta (ANTO) 1,024.00p -1.73%Unilever (ULVR) 2,016.00p -1.66%GKN (GKN) 179.40p -1.64%Smiths Group (SMIN) 934.50p -1.63%IMI (IMI) 749.50p -1.25%FTSE 250 - RisersTUI Travel (TT.) 160.50p +4.09%JD Sports Fashion (JD.) 844.50p +3.43%Betfair Group (BET) 723.00p +3.21%Henderson Group (HGG) 108.70p +2.55%JPMorgan Asian Inv Trust (JAI) 178.60p +2.47%Imagination Technologies Group (IMG) 438.00p +2.31%UK Commercial Property Trust (UKCM) 77.80p +2.23%Allied Gold Mining (ALD) 160.00p +2.17%Rathbone Brothers (RAT) 1,040.00p +1.96%Aquarius Platinum Ltd. (AQP) 187.70p +1.84%FTSE 250 - FallersPremier Foods (PFD) 6.00p -40.00%Talvivaara Mining Company (TALV) 189.90p -25.12%CSR (CSR) 191.50p -3.77%Stobart Group Ltd. (STOB) 124.70p -3.71%Rank Group (RNK) 117.10p -2.74%SIG (SHI) 89.85p -2.65%Grainger (GRI) 87.30p -2.62%Morgan Crucible Co (MGCR) 245.00p -2.20%Sports Direct International (SPD) 206.80p -2.18%Anglo Pacific Group (APF) 255.00p -1.92%