Miners peg back markets

European shares fell early in the session with miners hurt by falling metals prices while the afterglow of last week's Eurozone debt deal began to fade.

Miners were dented by Japan wading into the currency markets to rein in the value of the soaring yen, which sent the dollar up.

A stronger dollar makes dollar-priced metals costlier for the holders of other currencies and reduces demand.

Meanwhile investors were also nervous as they focused on the G20 meeting in Cannes later this week, with world economic growth and the Eurozone debt situation coming sharply into focus.

Miners Xstrata, BHP Billiton and Vedanta were all down by more than three per cent, with Rio Tinto off by 2.6 per cent.

Barclays was the top riser on the blue chip index, up 2.3 per cent. However, other banks were left behind, with RBS down 1.7 per cent and Lloyds slipping 1.4 per cent.

The power sector also enjoyed a lift, with International Power edging up 0.7 per cent and National Grid gaining 0.5 per cent.

Telecoms was one of the top performing sectors, with Vodafone up 0.6 per cent and BT 0.3 per cent higher.

On the FTSE All-Share, Homeserve shares plunged by more than 30 per cent after it was revealed that the company was being investigated for alleged insurance mis-selling.

In other market news Russian potash miner Uralkali said it is considering a full stock market listing in London next year as one of several options for improving shareholder value, but first needs to improve its corporate governance standards.

Meanwhile in Asia the Nikkei index closed down 0.6 per cent and the Hang Seng 0.7 per cent, with the tone set by disappointing results from Toshiba, Honda and Panasonic.