FTSE slides as banks weigh on European sentiment

The FTSE 100 has extended losses as concerns over eurozone banks’ need for more capital hit sentiment across the continent.

The UK's blue chip index stood down 0.8% at 5,623 shortly before midday, as European indices fell further into the red, driven down by financial stocks.

After falling more than 14% yesterday, Italian bank UniCredit was down a further 10% in morning trading as investors continued to react to news the bank would price its rights issue at a 43% discount.

Other major European financials were also lower, with Germany's Deutsche Bank and Commerzbank and France's Société Générale all down by more than 4%.

Fears UK banks are less in need of capital than their eurozone peers has seen RBS and Lloyds Banking Group outperform the sector, however. RBS was down 1.3% at 20.48p and Lloyds dipped 1% to 26.3p.

Worries over the eurozone were also reflected in the dwindling health of the single currency: the euro sunk to a 15-month low against the dollar at $1.283.

Italian 10-year bond yields moved back above a critical level at 7.07%, while French bond yields also rose following mixed reaction to France's latest bond auction.