FTSE slips as Eurozone downgrades sap confidence

The FTSE 100 edged down in early trading as the Eurozone crisis sapped confidence with France losing its Triple A rating and Greece teetering on the brink of a disastrous default.

Markets are now worried the Eurozone's bailout fund, EFSF, might lose its Triple A rating after France, the fund's second-largest guarantor, was stripped of its top-notch status.

Spain and a string of other Eurozone countries were also hit with downgrades on Friday.

To add to the bloc's woes talks have stalled over a Greek bailout, putting Athens under strong pressure to complete a deal with private creditors to cut debt to more sustainable levels or risk default in March when €14.5bn in repayments are due.

Meanwhile mining stocks came under pressure as copper prices fell on fears that a worsening euro crisis would derail global economic recovery.

Oil & gas shares could find some support as Brent crude rose on supply worries after Iran warned Gulf Arab neighbours of consequences if they raised oil output to replace Iranian barrels facing international sanctions. Higher oil prices translate into higher margins for energy groups.

The biggest single faller on the FTSE 100 was Carnival , the owner of the cruise ship that capsized off Italy's west coast. The company's shares dropped 17.6 per cent after it estimated the impact to 2012 earnings for loss of use alone to be around $90m.

Miner Fresnillo was down by 2.6 per cent, while also in the resources sector Vedanta was off by 1.8 per cent.

Engineer Amec was down by more than one per cent, with iPhone chip maker Arm Holdings dipping by 1.6 per cent.

Banks, including Lloyds and RBS, dipped slightly amid the Eurozone gloom.

Interdealer broker Icap was a high riser in early trading, up 4.3 per cent, while find manager Ashmore also edged up after last week giving an upbeat trading update.

Meanwhile BT group was up 1.8 per cent.

On the FTSE-250 Robert Wiseman Dairies shot up by 18 per cent after the company accepted a £280m bid from the firm from German company Muller.

In Asia the Nikkei closed down 1.4 per cent and the Hang Seng one per cent as the Eurozone downgrades cast a shadow there.

Trading is expected to be light overall today as US markets and government offices will be closed for the Martin Luther King Jr Day holiday.