Banks pushed the FTSE 100 lower by midday on Monday, with the sector under pressure as international leaders said even more money was needed from Europe to help ease the region's debt crisis and HSBC fell after results.

London's blue-chip index <.FTSE> fell 52.47 points, or 0.9 percent to 5,882.66 by 12 p.m.

Euro zone countries pledged at a meeting of finance leaders of G20 economic powers on Sunday to reassess the strength of their bailout fund next month, reminding investors the debt crisis is far from over.

The FTSE volatility index -- which climbs as investor pessimism rises -- was up more than 12 percent after the announcement, in contrast to the 26 percent fall in 2012.

Louise Cooper, a market analysts at BGC Partners, said volatility this year has been low because all the market players are sitting on their hands and not getting involved. Trading volume in Monday's morning session was at just 35 percent of its 90-day average.

Risk premia will explode, and Spain, Italy and other riskier countries will see their borrowing costs increase again. This crisis has not gone away despite what markets are telling us. Maybe everyone involved is just too knackered to care at the moment, or just hoping for the best, Cooper said.

Riskier equities bore the brunt of the selling after the statement from the G20, with banks, having already been forced to take a significant haircut on Greek debt, the top fallers.

HSBC shed 2.6 percent as Europe's biggest bank posted a $21.9 billion (13.8 billion pounds) profit for 2011, the best outturn by a western bank so far, but missed expectations for above the $22 billion mark.

With risk appetite off the menu, mining stocks fell along with base metal prices as the prospect of tighter bank lending in the face euro zone uncertainty, which continues to tip Europe toward recession, muddied the demand outlook for commodities.

Integrated oils fell too, although BP bucked the weaker trend, up 1.7 percent, on hopes of a more positive outcome for the oil major after its Gulf of Mexico oil spill trial was delayed to allow the firm to try to cut a deal.

The length and uncertainty of the vast trial process is not helpful for BP shares. Accelerating the conclusion would also free management to focus on the company's restructuring and reshaping, UBS said.


The threat of a global downturn remained as Europe's debt troubles rumble on and the impact it is having on business confidence remains stark.

India-focused refiner and power generator Essar Energy fell 8.3 percent as it missed full-year earnings forecasts.

shed 3 percent as the publishing group reported full-year 2011 results, with Panmure Gordon saying it sees little scope for meaningful earnings per share upgrades given the 'challenging' view on external markets.

Associated British Foods fell 2 percent as the owner of the high street retail group Primark gave a first half trading update, which Investec said was mixed and urged a degree of caution given the run-up of the shares ahead of the numbers.

On the upside, Marks & Spencer added 1.2 percent, helped by a UBS upgrade of the UK retailer to buy from neutral after it turned more positive on European general retailers, following recent economic data and the better than expected performance of retailers over a tough Christmas.

Investors continue to reward firms that surprise significantly on the upside with Bunzl up 2.1 percent and hitting a record high after the packaging firm posted a bigger-than-expected 11 percent rise in yearly pretax profit.

India-focused miner Vedanta climbed 1.3 percent after it announced plans to simplify its structure by placing all but one of its subsidiaries under an umbrella unit, as part of efforts to improve access to cash.

Should the deal complete, Vedanta has solved the top two issues pinning back shares: a complex corporate structure causing value leakage with cross holdings raising corporate governance concerns, and the ability to service PLC debt, Liberum analysts said in a note.

The FTSE 100 was also under pressure as Wall Street futures pointed to a weaker open for U.S. equities, ahead of pending home sales data, due for publication at 3 p.m.

(Written by David Brett)