FTSE digs in after gains

The FTSE started solidly today after breaking the 6,000 barrier yesterday but bleak service sector data cast a shadow across European markets.

Growth in the eurozone's service sector slowed for a third straight month in June — sending negative signals to investors.

The UK Markit/CIPS services PMI came in at 53.9 for June, down from 53.8 in May — representing weak growth.

But the FTSE 100 clung on to territory gained yesterday - staying above the magic 6,000 figure in early trading. Fund manager Schroders was the biggest climber, up 2.13 per cent, after yesterday raising equity at a premium through a London property fund.

Oil services company Wood Group rose 1.7 per cent after Goldman Sachs upgraded the shares to buy from neutral.

Consumer goods group Reckitt Benckiser jumped 1.6 per cent on continued speculation over a bid from rival Unilever.

Tullow Oil, which reported record interim revenue, was up 1.3 per cent.

There were few significant fallers although miners Xstrata and Rio Tinto dipped by 0.5 per cent. Safety testing company Intertek also fell by a similar amount.

Housebuilder Persimmon fell slightly after reporting a fall in sales volumes.

Barclays dipped by 0.5 per cent with Lloyds losing 0.4 per cent. RBS edged down while HSBC made a narrow gain.

In Europe CSM NV, the world's largest bakery products supplier, fell 10.1 per cent after saying a higher than expected surge in raw material costs would lead to lower first-half earnings.

Sterling slipped against the dollar on tracking losses in the euro versus the US currency.

Meanwhile bad debts held by local governments in China are a far bigger problem than first estimated, ratings agency Moody's warned.

Chinese banks had lent 8.5tn yuan (£820bn) to the local governments in 2010 in an attempt to boost growth.