FTSE on back foot as bank stress tests loom

The FTSE mirrored markets across Europe in early trading as investors awaited the results of bank strss tests with some lenders expected to fail to meet the criteria required.

With persistent fears over the Eurozone debt crisis and the threat of a US rating downgrade casting a shadow market sentiment was tepid.

European shares overall were on course for their biggest weekly fall in four months with the STOXX European banking index down more than four per cent so far this week.

Some 90 banks are being reviewed in the stress tests aimed at making them produce more transparent and sustainable balance sheets.

The biggest losers on London's blue chip index this morning with safety testing company Intertek dropping by 2.6 per cent.

BHP Billiton, which announced that it was paying £7bn for Petrohawk was the second biggest loser, down 2.3 per cent. Chip maker Arm Holdings dropped 1.9 per cent.

Meanwhile in the banking sector Lloyds was down 0.8 per cent, RBS 0.3 per cent and Barclays 0.6 per cent. HSBC nudged up slightly.

There were few significant risers with Imperial Tobacco up 0.23 per cent while embattled BSkyB edged up 0.14 per cent. Property company Hammerson was another slim riser.

Across the FTSE Blacks Leisure was the latest retailer to break gloomy news saying that a sales slump could trigger a new round of capital

fund raising. It shares plunged by around nine per cent after the news.

In major corporate news Citigroup will report its results later, following JPMorgan's positve figures yesterday.

Later on in the US inflation figures will be released in yet more data giving an indication of the extent of the economic recovery in the country.

The Nikkei in Tokyo edged up as electronics stocks were boosted the country moving towards more energy efficient devices in the face of power cuts triggered by its quake crisis.