Pharmaceuticals drag FTSE down

Pharmaceuticals pegged the FTSE 100 index back early in trading today after AstraZeneca announced pipeline problems and lowered its earnings per share outlook.

AstraZeneca, down 2.8 per cent, said it will take a $381.5m (£244m) pre- tax hit in the fourth quarter.

The problems have arisen because a cancer treatment and antidepressant had failed tests.

Rival GlaxoSmithKline shed 1.6 per cent as the sector overall was dented.

Pharmaceuticals are among a batch of defensive stocks that have outperformed the broader FTSE 100 in the year to date as investors have sought shelter from global economic problems.

Deal volumes were extremely light today as investors licked their wounds at the end of a year that has seen the FTSE 100 fall 9.5 per cent on global debt worries.

There was more gloom for investors yesterday when European Central Bank President Mario Draghi quashed hopes for more aggressive bond purchases to help restore confidence.

Banks remained under pressure today with no end to Europe's debt crisis in sight and regulatory concerns lingering over the sector.

UK-listed banks extended the previous session's falls following the British government's decision to back proposed reforms to the UK banking system, which could cost lenders as much as £8bn.

Barclays and RBS each fell 0.5 per cent.

Meanwhile Shell edged down after it reported that it had been hit by a spill in the Gulf of Mexico.

Among the gainers, Aggreko climbed 2.1 per cent as Citigroup raised its earnings estimates by up to 12 per cent after the temporary power provider nudged up 2011 profit forecasts.

Luxury retailer Burberry was also among the top five climbers.

Mid-cap SVG Capital, the biggest investor in buyout firm Permira, rose 17.8 per cent after it unveiled plans to return £170m to shareholders and said it would start placing money with other private equity groups.

The CBI's December industrial trends report is due for release at 11am.

In Asia the Nikkei closed up 0.49 per cent and the Hang Seng 0.06 per cent.