The top share index fell on Thursday, led by weaker banks and miners as worries over Italy's debt situation and the future for the euro zone saw investors shun riskier assets.
Global lender HSBC
A number of brokers cut their target prices and estimates for HSBC, including JPMorgan Cazenove, Deutsche Bank and UBS.
Miners <.FTNMX1770> fell back in tandem with metal prices, with London copper futures hitting their lowest level in two weeks as the debt crisis in Italy heightened fears about the global economy which undermined demand hopes.
But Anglo American
At 9:15 a.m., the FTSE 100 <.FTSE> index was down 26.03 points, or 0.5 percent, at 5,434.35, albeit having rallied from an early session low of 5,360.19.
The blue-chip index shed 1.9 percent on Wednesday, hitting its lowest closing level in more than a week.
U.S. stocks dropped 3 percent on Wednesday and Asian stocks tumbled on Thursday, as Italy hogged the debt crisis spotlight after its 10-year bond yields shot above 7 percent -- a level which forced bailouts in Ireland, Portugal and Greece.
In a sign of the depth of fear gripping European capitals, EU sources told Reuters that French and German officials had held discussions about a euro zone split.
European leaders seem to be losing their grip on this crisis. The dam is cracked, but does Europe know how to fix it before it is too late? said Simon Furlong, Trader at Spreadex.
Blue chip peer Meggitt
Among the minority of blue chips gainers, Wm Morrison
On the domestic macroeconomic front, the latest Bank of England interest rate decision is due at 12 p.m., although no change is expected to monetary policy.
The equity market remains an avoid as far as I am concerned. It is pretty much discounting a perfect solution for the European, the Chinese and the American problems, something which might happen but it is just not very likely, said Lex van Dam, hedge fund manager at Hampstead Capital, which manages $500 million of assets.
(Editing by David Holmes)