Global markets dragged down by Eurozone crisis

Gains by banks were outweighed by heavy losses among miners in early trading today as Eurozone bailout fears and bleak forecasts on world economic growth cast a shadow over markets.

After last week's rollercoaster ride, volatility looked set to continue as Eurozone leaders conceded that they would have to pump in trillions to have an impact on the region's debt crisis.

As negotiations continue jittery investors were put off equities. The MSCI world equity index fell 1.1 per cent.

In London sentiment was weak although banks, which have been consistently dented by exposure to Eurozone debt invarying degrees, opened steadily.

Lloyds was the highest climber on the FTSE 100, up 2.2 per cent. RBS was also up more than two per cent while Barclays nudged up by more than one per cent.

Tesco was also one of the top five climbing shares on the blue chip index, up 1.3 per cent after reports that billionaire investor Warren Buffett had upped his stake in the grocer.

That was interpreted as a vote of confidence for new chief executive Philip Clarke. Meanwhile the company is also slashing its prices on thousands of products in a bid to raise sales.

Rival Sainsbury's also edged up by more than one per cent. But the mining sector took heavy hits as the gloomy outlook for global growth took its toll. Fresnillo was the biggest loser, down seven per cent.

Randgold, Kazkhmys and Antofagasta all lost between three and four per cent in early trading. Materials technology giant Johnson Matthey was down by a similar amount.

The price of gold continued to edge down from previous highs as it steadily loses its attraction as a safe haven.

The FTSEurofirst 300 index of top European shares was up 0.6 per cent at 887.66 points, with BNP Paribas up 5.3 per cent while miner Rio Tinto was down 1.4 per cent, reflecting the gulf in the two sectors.

UBS shares opened around two per cent down after the resignation of chief executive Oswald Gruebel over the rogue trading scandal which has engulfed the bank.

The Nikkei closed 2.17 per cent down and the Hang Seng 1.4 per cent.

Across the Atlantic the Chicago Fed index for August is due for release followed by August new home sales data.