Britain's top share index fell on Friday, led lower by banks and commodity stocks on monetary tightening in China and downbeat growth figures from the eurozone, while defensive stocks were in demand. The FTSE 100 closed down 19.03 points, or 0.4 percent, at 5,142.45.
The index was in positive territory at the start of the session, rising as high as 5,207.73, before a surprise move by China to increase the level of reserves commercial banks must hold to curb lending and inflation. The sell-off was compounded by news the eurozone's economic recovery stumbled in the final quarter of 2009 as gross domestic product barely expanded, dragged down by a poor German performance despite healthy figures from France.
Banks were in the doldrums, with underlying sentiment also cautious over the detail of the European Union's Greek rescue plan, and ahead of the sector's upcoming reporting season. Barclays, which is due to report full-year results on Tuesday, fell 2.4 percent.
Lloyds Banking Group dropped 3.2 percent as it rounded off a 23 billion pound ($36.1 billion) repair of its balance sheet, issuing a final tranche of new shares in a move that will trim the UK government's stake. HSBC, Standard Chartered and Royal Bank of Scotland were between 1.1 and 2 percent lower.
Eurozone finance ministers may discuss a financial support package for Greece on Monday, but they will not reveal details because there is a need to keep the market guessing, an EU source said on Friday. EU leaders promised to help Greece at a summit on Thursday, but did not give details on what they could do to support the Mediterranean country in tackling a deficit and debt crisis. Miners reversed early gains as China's monetary tightening clouded the outlook for commodities demand, with Vedanta Resources, Xstrata and Kazakhmys off between 1.9 and 2.5 percent.
"At the moment there is quite a lot of newsflow that's quite risk negative," said Angus Campbell, head of sales at Capital Spreads. "The China news is certainly a bit of a blow to the bulls and from a technical point of view and fundamentally the equities look a little bit overstretched at the moment." Energy stocks were also lower with BG Group and Royal Dutch Shell down 0.2 and 1.2 percent respectively.
Defensive issues were the main prop for the index. National Grid was the top blue chip riser, up 2.6 percent, while United Utilities rose 1.7 percent, GlaxoSmithKline added 1.4 percent and British American Tobacco was 0.8 percent firmer. Diageo added 1.2 percent, clawing back all of Thursday's 0.7 percent fall made after the maker of Smirnoff vodka and Johnnie Walker whisky posted first-half results. The FTSE 100 index rose 1.6 percent for the week, recouping some of the previous week's 2.5 percent decline.