The FTSE fell on Thursday, pressured by financial stocks, as concerns over Europe's debt problems took centre stage ahead of a French debt auction later in the session.

Banks <.FTNMX8350>, under the cosh on Wednesday when funding concerns were highlighted by a deeply discounted rights issue from Italy's UniCredit , extended falls, as the spotlight shone firmly on France, especially given concerns about the country's triple-A credit rating.

France plans to raise up to 8 billion euros in long-term debt, following on from Wednesday's 10-year German Bunds auction, which while subdued nevertheless marked a sharp improvement from November.

(Banks) are being completely determined by sovereign risks in the euro zone and I don't see any change to that relationship in the short term, Ian Scott, strategist at Nomura, said.

Inter-dealer broker (IDB) ICAP was among the top fallers on the blue-chip index, down 2.5 percent, after midcap peer Tullett Prebon said it would take new cost-cutting measures, although it expects 2011 revenue to be in line.

Tullett's shares shed 2.3 percent.

UBS also weighed in on ICAP ahead of its trading statement on Feb 1. We remain cautious on the IDB which we expect to be affected by bank deleveraging, the bank said in a note.

The UK benchmark <.FTSE> was down 22.05 points, or 0.4 percent, at 5,646.40, by 09:34 a.m. BT, having fallen 0.6 percent on Wednesday.

Broker comment was behind a number of moves on the FTSE 100 on Thursday. An upgrade to buy from BofA Merrill Lynch helped send shares in Sage 1.4 percent higher.

The bank highlighted the software maker's defensive qualities and plans to return cash to shareholders against a backdrop of another tough year for European software and IT services.

SECTOR FUNDAMENTALS

Irish building materials firm CRH , promoted to the FTSE 100 in December, topped the blue-chip fallers list, down 2.4 percent, as Credit Suisse downgraded its rating for the stock, and for the sector, in a review.

Credit Suisse cut CRH to underperform and reduced its stance on European building materials to market-weight, saying it views sector fundamentals and valuations as unattractive at and does not anticipate any improvement in profitability this year.

ARM Holdings , meanwhile, rose 3.4 percent to top the FTSE 100 leader board as UBS placed a short-term buy rating on the chip designer, saying it expects the firm's fourth-quarter results to surpass consensus expectations and sees further catalysts in the near term.

Richard Hunter, head of equities at Hargreaves Lansdown, expects the theme for investors this year to be far more stock specific in the wake of a tough 2011, which was characterised by huge bouts of volatility as appetite for risk waxed and waned.

(Investors will try to) identify stable cash-generating companies, and if they can get something with a decent to high yield that would be a bonus on top, rather than taking the overall broad-brush approach to the market, he said.

This comes especially after the inclusion of Polymetal and Evraz, with the index starting to look like a mining and oil index.

Precious metals miner Polymetal International
and Russian steelmaker Evraz and joined the FTSE 100 index in December, alongside CRH.

(Additional reporting by David Brett and Jon Hopkins; Editing by David Holmes)