The top share index fell on Wednesday, as financials were hit on euro zone debt concerns and a profit warning from insurer Admiral , outpacing gains in commodity stocks after inflation data from China.

Car insurer Admiral fell 28.3 percent after it warned its full-year profits would be hit by big claims.

Shore Capital cut back its EPS forecasts for Admiral for 2011 and 2012 by up to 8 percent and reduced its dividend estimates for the same years by up to 7.3 percent.

This is looking ominous and indeed, we could easily be into an unhealthy downgrade cycle for the group, Shore Capital said.

London's blue chip index <.FTSE> shed 19.13 points, or 0.3 percent to 5,548.21 by 0908 GMT, having gained 1 percent in the previous session.

Banks <.FTNMX8350> were weaker, dragged down by HSBC , which fell 3.3 percent after warning the outlook for the global economy is very challenging as it reported a 36 percent drop in underlying profits in the third quarter.

Worries too remained over Europe as the debt crisis claimed its biggest scalp to date, that of Italy's Prime Minister Silvio Berlusconi.

His promise to resign saw the country's bond yields swell to near euro-era highs, and prompted clearing house LCH Clearnet to increase the extra deposit it demands from clients to trade all Italian government bonds and Index-Linked securities.

I don't think a default by Italy has been priced in by the market. Any potential of the yields getting up to 7 percent is a real danger signal and the market will react quite drastically, Martin Dobson, head of trading at Westhouse Securities, said.

Italy now looks set for lengthy political uncertainty with Berlusconi's centre-right party calling for elections and the main opposition for a national unity government.

Ex-dividend factors clipped 1.46 points off the FTSE 100, with Barclays , Bunzl , and Unilever all trading without their payout attractions.


Miners <.FTNMX1770> rose, tracking metal prices higher after China revealed inflation slipped in October, allaying concerns the government would take further steps to cool its overheating economy.

Xstrata was the top performer on the FTSE 100, up 2.0 percent, while Rio Tinto added 0.8 percent.

The Chinese Central Bank has considerable ammunition to try to ensure that the economy has a soft rather than hard landing, said Gerard Lane, equity strategist at Shore Capital.

We would suggest that outlook for those stocks with emerging market sales exposure ... are likely to improve in the months ahead, as Central Banks look to ease policy.

Integrated oils <.FTNMX0530> rose too after the data from China.

Among the oil explorers, however, Tullow Oil fell 6.1 percent after the firm downgraded production forecasts for 2011, as it continued to experience delays in Uganda and a weaker performance in its oil field off the coast of Ghana.

On the macro economic front, Britain's goods trade deficit widened in September to its highest since the series began in 1998 due to a record rise in imports, official data showed on Wednesday.

The rise in the deficit was driven by a 1.2 billion pound surge in imports, mainly of oil, chemicals and silver, while exports rose by less than 0.1 billion pounds.