UK's top share index falls

The FTSE 100's eight-day winning streak came to a halt on Wednesday as worries over debt contagion in Europe and the demand outlook in China hit banking and commodity stocks. Britain's top share index closed 21.11 points or 0.4 percent lower at 6,002.92, having risen more than 6 percent in the previous eight sessions - its longest winning run in almost two years.
Bill McNamara, technical analyst at Charles Stanley, said the FTSE was probably due a minor pullback, although that did not necessarily mean the rally was over, especially with the FTSE holding above 5,950. Royal Bank of Scotland and Barclays topped the list of blue chip fallers and a weak banking sector, down 3.4 and 3.8 percent respectively, after ratings agency Moody's Portugal's debt to "junk" status.
"Today's meeting of French and German banks in Paris is unlikely to assuage market concerns of a further ratings downgrade on other peripheral nations amidst concern about how debt rollovers might be treated by the ratings companies," a London-based trader said.
The euro extended losses against the dollar and yen, as the forex market echoed worries that Greece's problems will spread to other peripheral economies. And gold prices continued their gains from Tuesday, pushing above their 55 day moving average as investors bought into the precious metal's safe haven qualities. Miners , however, were strewn across the list of FTSE fallers after China said it would raise benchmark interest rates by 25 basis points from Thursday. The third rate rise this year left investors wondering if the country's government may be tightening too quickly amid signs growth is already starting to slow.
Heavyweight Vodafone shed 0.9 percent on European Union plans to make it easier for retailers such as Tesco to compete with dedicated telecoms network operators. The move comes as the EU proposes a cap on regulated wholesale prices for roaming services that will fall drastically over a three-year period.
BP slid 0.9 percent, leading integrated oil stocks lower. Traders cited concerns the oil major may lower its earnings forecasts. BP is scheduled to publish its results on July 26. BSkyB was down 2.1 percent with traders pointing to concerns News Corp's deal for the satellite broadcaster could be delayed, as new phone-hacking allegations pile pressure on Rupert Murdoch's global media empire.
WPP , the world's largest advertising group by revenue, shed 3.1 percent as Morgan Stanley cut its rating to "equal weight". On the upside, Serco rose 3.9 percent after BofA-Merrill Lynch raised its earnings forecasts and said its growth potential was being undervalued by the market.
Experian added 1.5 percent as Citigroup upgraded its rating on the credit checking agency to "buy" and raised its forecasts, while assuaging investor concerns over its Brazilian business Serasa. Smith & Nephew gained 1.7 percent, echoing a rise in US woundcare rival Kinetic Concepts , with traders citing vague private equity bid talk as a catalyst.
Macroeconomic data from the United States did little to inspire confidence, as service sector growth slowed modestly in May and the number of planned layoffs at US firms increased in June for a second straight month. Investors remained wary ahead of US employment data due on Friday, with jobs growth seen as key to the recovery in the world's largest economy.