Bank stocks drag on flat FTSE 100

WEAK banks dragged Britain’s top share index lower yesterday on persistent concerns over European debt, while drug stocks were also under pressure, offsetting strength from BP.

The FTSE 100 closed down 9.17 points, or 0.2 per cent, at 5,569.27, having quickly surrendered an opening push above 5,600.

Banks were the main drag on blue-chip sentiment, shedding 1.3 per cent, as worries over the debt picture in Europe continued to have an impact.

“It’s really just continuing the theme we've seen all this week. We've got a really choppy market with no real overall direction, and the worry at the moment is this debt crisis in Europe,” David Jones, chief market strategist at IG Index, said.

Drug stocks also fell back, with AstraZeneca the worst off, down 1.9 per cent after RBS cut its rating for the drugmaker to “hold” from “buy”.

Metals group Vedanta Resources was the biggest FTSE 100 faller, down 4.3 per cent, after its Sterlite Industries unit was ordered by a court to shut its Tuticor copper smelter in south India.

“The problem at the moment is that there’s been no real major economic news for the markets to hang their hats on,” IG Index’s Jones said, adding that US September non-farm payrolls, due on 8 October, should provide fresh direction.

BP was in demand, up 3.9 per cent, after saying it was to fundamentally restructure itself in the wake of the Gulf of Mexico spill.

Defence company Rolls-Royce rose 3.5 per cent after Morgan Stanley hiked its rating to “overweight”.

Plumbing firm Wolseley grabbed the top spot on the blue-chip leader board, climbing 6.4 per cent, with traders citing US mortgage data given the company’s big exposure to the world’s largest economy.