The boss of the European Central Bank disappointed investors today after he failed to sanction fresh emergency measures to tackle the debt crisis.
Mario Draghi last week promised to do whatever it took to save the euro, triggering a rally on world markets amid hopes he would intervene to lower Spain’s borrowing costs.
The FTSE 100 Index lost earlier gains however to fall 50.5 points to 5,662.3 after he said the ECB would consider such a move, dashing hopes of immediate action.
Banks were among the biggest losers, with Lloyds Banking Group down 4%, or 1.3p at 29.4p, and Barclays off 6p to 162.3p.
Royal Bank of Scotland was 5% lower following reports that senior UK Government figures were discussing the possibility of full nationalisation of the bank. Shares were 10.9p lower at 204.5p.
In corporate news, shares in BAE Systems were down 1% after a 10% fall in half-year revenues fuelled concerns about prospects in its key defence markets in the UK and the US.
While profits were in line with expectations, shares slipped 3.4p to 309p.
Outside the top flight, Ladbrokes shares were 2.1p higher at 156.8p after a better-than-expected 11% rise in operating profits at the bookmaker, which was helped by favourable results at the Grand National and Cheltenham festival.
The biggest Footsie risers were Smith & Nephew up 15.5p at 675p, British American Tobacco ahead 27p at £34.67, Schroders up 10p at £13.02 and National Grid ahead 4p at 669.5p.
Among the biggest Footsie fallers were Vedanta Resources down 69p at 901.5p, Antofagasta off 57p at £10.41 and Aviva off 14.1p at 285.2p.
Mark Ireland, of investment manager and financial planning specialist Brewin Dolphin in Inverness, noted that the day’s risers included FirstGroup gaining 2.6% to 236.3p, A.G. Barr up 2.1% at 426.2p and Devro rising 1.4% to 294.3p.
Fallers included Parkmead off 5.5% at 13.1p and Petrofac losing 3% to £14.49.
