Britain's top shares dropped in early trade on Monday, led lower by banks and commodity stocks as euro zone debt jitters exacerbated by a political crisis in the Netherlands and French election results sapped demand for riskier assets.

In France, results from the first round of a presidential election showed Socialist candidate Francois Hollande marginally ahead of incumbent Nicolas Sarkozy. Some analysts said a defeat for Sarkozy in the May 6 second round could weaken cooperation between France and Germany in dealing with the debt crisis.

The Netherlands, a core euro zone member, was drawn into the crisis at the weekend when its government failed to agree on budget cuts, making elections almost unavoidable and casting doubt on its support for future euro zone measures.

With Holland being one of the cornerstones on which the euro zone was founded, rejection of austerity measures there has amplified ramifications for the rest of the euro zone, said Mike McCudden, Head of Derivatives at Interactive Investor.

More market talk of the dominoes taking their positions for the fall, with the spotlight cast over Spain and now Holland, has investors taking flight this morning as there is little news in the global picture to provide comfort.

At 0817 GMT, the FTSE 100 <.FTSE> index was down 78.35 points, or 1.4 percent at 5,693.80, dropping back below the psychologically important 5,700 level, having gained 0.5 percent on Friday to post its biggest weekly gain since February.

Banks <.FTNMX8350> suffered as concerns over their exposure to the euro zone debt crisis created uncertainty ahead of the sector's first-quarter results season.

Barclays , the first of the British banks to report, fell 2.2 percent ahead of its first-quarter results, due on Thursday April 26, and with its annual general meeting to be held on Friday, April 27.

The Local Authority Pension Fund Forum (LAPFF) has urged its members at the AGM to oppose the pay deal for Barclays' Chief Executive Bob Diamond, who is due to take home about 17 million pounds ($27.4 million) in salary, bonus and share awards for last year.

Miners <.FTNMX1770> were also among the biggest fallers as copper prices dropped after mixed factory activity data from China, the world's top consumer of metals.

China's factories posted their best performance this year as a measure of new business rose from multi-month lows in April, with the HSBC flash PMI at 49.1 vs final March reading of 48.3, but overall activity still contracted for a sixth successive month.

Integrated oils <.FTNMX0530> were also a big drag on the blue chips as crude prices fell back on the China data and more euro zone uncertainty.


There were just two blue chip gainers early on.

BSkyB rose 1.4 percent supported by its ongoing share buy-back programme, and ahead of third-quarter results due on May 2. Investors will be looking to see what changes might occur at the satellite broadcaster now that James Murdoch has stepped down as its chairman.

Market heayweight Vodafone gained 0.2 percent after it agreed to buy C&W Worldwide for 38 pence a share in cash, valuing the mid-cap firm at 1.04 billion pounds in total and adding a fixed line network to its wireless operations.

C&W Worldwide (CWW) was easily the top gainer on the London market, jumping 16.5 percent to just below the offer price.

We believe this offer is positive for CWW as there was still some scepticism in the market that Vodafone would bid at all, particularly after Tata Communications (TCOM) stated last Wednesday that it was not going to bid because it was unable to reach agreement with CWW on an offer price, Espirito Santo Investment Bank said in a note.

We note TCOM can now re-enter the process with a counter bid although we think this is unlikely at this level.

(Editing by Catherine Evans)