European fears drag FTSE down

BRITAIN’S top share index closed lower yesterday hurt by banks, on renewed concerns over the Eurozone sovereign debt crisis, and miners dented by weaker metals prices and concerns over the impact of floods in Australia.

But Smith & Nephew, Europe’s largest maker of replacement knees and hips, jumped to the top of the blue-chip leaderboard, up 9.5 per cent, on a report it received a bid last month from Johnson & Johnson, which was not disclosed.

The FTSE 100 index ended down 28.03 points, or 0.5 per cent, at 5,956.30, extending its losing streak to a third straight session, though it remained up one per cent in 2011.

Banks fell on worries about European debt, with the spotlight on Portugal.

The European Central Bank threw Portugal a temporary lifeline yesterday by buying up its bonds, traders said, as market and peer pressure mounted for Lisbon to seek an international bailout.

Barclays bucked the weak sector trend, up 0.6 per cent, boosted by a UBS upgrade to “buy”.

Miners tracked metals prices lower as European debt concerns curbed risk appetite, and with flash floods in Australia, which have damaged Queensland state’s $20bn coking coal export industry, also hurting the sector.

“Many of the issues which were weighing on the market at the end of last year are still there - the debt issues are still in place within the Eurozone - and I also think one of the things which is worrying markets a bit is inflation,” said Peter Dixon, economist at Commerzbank.

Oil major BP dropped 1.3 per cent after the Trans Alaska Pipeline, of which it is one of the owners, was shut for a third day.

Elsewhere, Capital Shopping Centres fell 3.9 per cent as investors feared US company Simon Property Group would abandon its pursuit of the firm.

Oil explorer Tullow Oil rose 1.4 per cent after bullish updates for two of its wells in Ghana and Mauritania.

Also on the upside, British testing firm Intertek rose 5.6 per cent, helped by an upbeat note from Credit Suisse.