EU debt crisis hits FTSE

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

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 £10bn deal with Russia’s Rosneft and takeover talk provided some cheer, but failed to lift the market out of the red.

The oil giant added 1.2p to 500.7p following Friday’s announcement of an Arctic exploration alliance and share swap with Russian government-owned Rosneft.

BP will take a further 9.5% stake in Rosneft, while Rosneft will own 5% of BP following the deal, which the UK Government described as “groundbreaking”.

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

Smiths Group headed up the risers board with an 8% surge, ahead 99p to 1381p, following Friday’s after-close announcement that the firm had rejected a £2.45 billion cash approach for its medical arm.

Smith & Nephew followed it with a 4% gain, up 24p to 709p, after weekend reports that US suitor Johnson & Johnson is preparing to make a formal offer for the group worth £7bn.

Rolls-Royce dropped 0.5p to 654p despite the British engine maker unveiling its largest ever marine naval surface ship contract to supply vessels for the US Navy.

The company will deliver gas turbines, waterjets and propulsion system software for 10 US Navy Littoral Combat Ships made by defence firm Lockheed Martin.

Outside the top-tier, UK Coal fell nearly 6%, even though it reported an increase in production over the past year despite disruption caused by a gas leak at one of its mines.

The company said it made a small loss on property sales during the year after it exchanged contracts worth £28.5 million. Shares dropped 3.3p to 52p.

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.

The biggest Footsie 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.