The FTSE 100 Index has dropped 30.5 points, or 0.5%, to 5960.80 in early trading paced by British Airways and HSBC.
British Airways, Europe's third-biggest airline, has dropped 1.6% to 356.75p after JPMorgan Chase cut its recommendation on the stock to “neutral” from “overweight.”
HSBC, Europe's largest bank by market value, has lost 2.5% to 963p. The shares are trading without the right to a fourth-quarter dividend of 17.7p.
Shares of Corus Group have also declined 2.9% to 91.35p, after climbing 8% yesterday on a report the UK's biggest steelmaker may have held merger talks with Russia's Evraz Group SA.
In Japan the Nikkei 225 Stock Average fell 129.32 points, or 0.8% to 16,495.48 at its slipping from a six-week high.
Exporters such as Toyota Motor dropped after a report on US producer prices and comments by Federal Reserve Chairman, Ben S. Bernanke, raised concern borrowing costs in the world's largest economy will keep rising this year.
Acom also led consumer lenders lower after slashing its profit forecast because it set aside more money to repay customers it overcharged.
In the US stocks finished lower after an erratic session in which investors weighed a conflicting report on wholesale inflation against questions about the Federal Reserve's interest-rate policy.
The Dow Jones industrial average fell 39.06 points to close at 11,235.47 late last night.
Declining issues outnumbered advancers by nearly 8-to-3 on the New York Stock Exchange, on volume of 1.66bn shares, up from 1.48bn traded on Monday.
Technology stocks were particularly volatile. Oracle started lower yesterday, then led a midday tech rally before finishing 10 cents lower at $13.62. Oracle reported tepid results late Monday. Its earnings for its fiscal third quarter were a penny better than Wall Street forecasts, but investors were concerned about slipping licensing revenue.
Rambus rose $1.82, or 5.3%, to $36.22 after the microchip technology licensing company increased its first-quarter revenue outlook.
Target slipped 17 cents to $53.36 after tightening its March sales forecasts, now expecting sales to rise between 1.5% and 2.5%. The retailer originally predicted sales increases of 1% to 3%.
Citigroup fell 18 cents to $47.22 after it announced chief executive Charles O. Prince III would succeed Sanford I. Weill as chairman when the latter officially retires at the company's April 18 annual meeting. Prince will retain the CEO title.IFAonline
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