MIDDAY REPORT: Headline shares were firmly lower in midday trade, with euro problems plaguing the financial sector and falling metals prices impacting the miners, while IAG dived on Iberia problems.
At midday, the FTSE100 was down 35.25 points at 5,805.99 with the FTSE250 off 76.4 points at 11,384.5 and the FTSE Smallcaps fractionally lower at 3,043.78.
US stock futures were lower, taking a lead from easing across European bourses.
Dow Jones Industrial Average futures lost 30 points at 13,089, S&P500 futures dropped 3 points at 1,392 and Nasdaq 100 futures eased a point at 2,707.
Investors in London were cautious as a lack of news on central bank stimulus moves keeping sentiment depressed. The BoE predicted lower growth in the UK GDP, seeing annual growth of about 2% in two years, down from its previous 2.7% advice and lessening the likelihood of a further bout of QE anytime soon.
Continued uncertainty in the Eurozone kept financial issues on the back foot, while the global downturn pushed metals prices lower, impacting the mining heavyweights.
Banks remained in the spotlight following yesterday's thrashing of Standard Chartered, although shares in the Asia-facing group topped the early leaderboard, rallying 88p at 1,316.5p, helped by Berenberg upgrading the stock from sell to hold.
Elsewhere, HSBC fell 2.4p at 558.3p and Barclays lost 2.52p at 177.33p, while Lloyds edged down 0.525p at 31.15p and Royal Bank of Scotland bucked the trend, gaining a modest 0.4p at 227.9p.
Amongst the insurers, South Africa's Old Mutual dropped 2.75p at 167.05p on reporting a fall in half-year profits as a weak rand hurt returns.
Mining giant Rio Tinto jumped 87p at 3,217.5p, when it beat analysts' expectations on reporting a 22% fall in profits on lower iron ore and copper prices.
The rest of the sector was mixed, with Vedanta Resources the worst performer, down 19.25p at 987.75p. BHP Billiton lost 19p at 1,941p, while Anglo American rallied 7.25p at 2,015.25p.
Oil producers weakened as crude prices eased on demand concerns, with BP down 7.7p at 446.1p, BG Group off 18.5p at 1,305.5p and Shell 41p back at 2,325.5p.
Holiday Inns operator InterContinental Hotels Group slipped 9p at 1,716p, hit by a downgrade from overweight to neutral at JP Morgan Cazenove.
A BoA Merrill Lynch downgrade from neutral to underperform sent Smiths Group 35.5p lower at 1,077.5p.
The wooden spoon went to troubled airlines group IAG, diving 6.45p at 150.15p as Iberia problems persist.
Ex-dividend factors impacted some of the blue chips, with specialist engineer GKN down 4.65p at 214.75p, global brewer SABMiller off 47.25p at 2,821.25p, and telecoms giant BT Group 5.1p lower at 219.3p.
The sparse upside included distribution group Bunzl, up 12p at 1,148p, chemical group Croda International, 24.5p better at 2,413.5p, and cigarette maker Imperial Tobacco, ahead 6.5p at 2,503.5p.
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