FTSE falls 0.5% as EU debt fears slash gains

The FTSE100 fell in early trading as concerns over EU debt problems offset any reassurance the market might take from easing oil prices.

Falling after a small gain the previous session, the FTSE100 dropped 29 points to 5,940.65 at just after 9.30am.

Jittery traders were awaiting news from Europe of the results of a Portuguese bond auction, slated for later today.

Prudential was leading in early trading following strong full year results for 2010. Its share price rose 3.5% to 739p per share.

It was a mixed bag in European markets, with the German Dax up 0.19% to 7,178.12 points but the French Cac 40 falling 0.19% to 4,008.26 points.

Overnight in the US, financial companies pushed shares higher on signs banks may soon raise their dividends. Financial stocks in the S&P index rose 2.2%.

Airline stocks were also up as oil price pressures decreased after OPEC discussed whether to increase production.

The Dow Jones index ended the day up 124 points, or 1%, at 12,214 points.

Japanese shares were extending gains for a second day on Wednesday after a pullback in oil prices. By the midday break, the benchmark Nikkei rose 1% to 10,633.46.