The FTSE 100 index is 38.7 points, or 0.7%, lower at 5,859.1 points this morning, led by concerns over global interest rates and a fall in copper prices.
Mining stocks have taken about 9 points off the FTSE, with BHP Billiton down 2.70% at 938p and Antofagasta 2.85% lower at 2,043p.
Oil and gas stocks like BP are also under pressure, reacting to a 2% slide in US crude oil prices in the previous session. BP is down 1.10% at 630p.
BT has fallen 1.08% to 229.25p after investment bank ABN AMRO cut its rating to "sell" from "hold".
A Merrill Lynch downgrade has also sent property firm Liberty International 1.94% lower to 1,111p.
Britain's largest-listed insurance broker and mid-cap Jardine Lloyd Thompson has fallen 10.67% to 397.50p after reporting a 20% fall in 2005 profit due to competitive pressure and currency effects.
In Japan, the Nikkei 225 Stock Average slid 175.14 points, or 1.1% to 15,726.02 points, led by semiconductor-related shares such as Advantest and Tokyo Electron after Texas Instruments joined Intel in saying quarterly sales may miss forecasts.
Advantest fell 490 yen, or 3.6%, to 13,110 and Tokyo Electron dropped 260 yen, or 3.4%, to 7,300.
Utility shares including Tokyo Electric Power and Kansai Electric Power also fell after Merrill Lynch cut its recommendation to "neutral" from "buy", saying the prospect of higher interest rates in Japan may increase their debt burden. Tokyo Electric declined 70 yen, or 2.2%, to 3,090 and Kansai Electric lost 55 yen, or 2%, to 2,730.
Meanwhile, Honda advanced 150 yen, or 2.2%, to 6,900 and Toyota Motor added 20 yen, or 0.3%, to 6,210.
In the US, the Dow Jones industrial average fell 63.00 points, or 0.57%, to end at 10,958.59 points as a jump in 10 year Treasury note yields to a 21 month high rattled investors by signaling higher interest rates ahead.
The concerns hurt shares of interest rate-sensitive utility stocks, while energy shares like Exxon Mobil slid as crude oil prices fell 2%. Exxon Mobil fell 1.6% to $59.98, while Schlumberger dropped 4%, or $4.88, to $117.34. Banc of America Securities cut its price target of Schlumberger and other oil service companies.
Meanwhile, AT&T's announcement on Sunday it planned to buy BellSouth for $67bn in stock boosted telecommunications shares. BellSouth stock rose nearly 10%, or $3.05, to $34.51, while AT&T lost 3.5% at $27.02.IFAonline
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