London’s FTSE 100 Index dipped lower today as banks and energy firms weighed on the market.
Financial stocks were in the spotlight after French bank Societe Generale issued a profit warning.
The Footsie was 15.3 points lower at 5483.4 amid falls in other world markets after it lost 1% yesterday.
Asian markets suffered big falls overnight after China moved to cool economic growth by adjusting the amount of money banks are required to keep on reserve - the first such change since June 2008 and a sign of tighter monetary policy. Japan’s Nikkei lost more than 1%.
In Europe, France’s CAC 40 was 0.2% lower after Societe Generale said it would just make a “slight” profit for the fourth quarter after having to make hefty asset writedowns because of “contrasted signals” from the US property market.
Nick Serff, market analyst at City Index, said investors had been spooked by the risk of toxic assets still on banks’ books.
He added: “With earnings season now in full swing client focus has switched to which companies are likely to move the markets over the short term.”
Banks were on the fallers board in London, with Barclays down 3.8p to 312.8p and HSBC losing 7.2p to 721.2p.
There were further losses for energy stocks after the price of oil retreated below 80 US dollars a barrel on fears the China move will dampen global economic growth prospects.
Royal Dutch Shell was 23p lower at 1801p after a downgrade from Morgan Stanley, while BP dropped 7.3p to 626.5p and Cairn Energy slipped 3.1p to 358.1p.
Miners experienced a mixed session after falling sharply yesterday. Fresnillo was 5p higher at 813p, but Lonmin fell 33p to 2036p.
In UK retail news, shares in high street baker Greggs were 5.8p lower at 409.2p after it announced a rise of 1.1% in like-for-like sales for the four weeks to December 26.