Miners dragged the FTSE 100 down this morning after Australia cut its economic growth forecast, with investors also nervous ahead of key US jobs data.
The Reserve Bank of Australia, which cut its main interest rate earlier this week, warned the country's GDP will only expand by 3% in 2012, lower than its earlier forecast of 3.5% in February.
Consumer prices are expected to increase by 2.5% down from 3%.
The warning on growth spooked investors who sent the FTSE 100 down 1% or 54 points, to 5,712.
Miners Antofagasta, ENRC, Rio Tinto, Xstrata and Anglo American were among the worst performers on the FTSE, with the stocks down as much as 5%.
Elections across Europe in France, Greece, Italy and Germany this weekend also caused investors to take profits were they could, with both the Euro Stoxx 50 and the French Cac down 0.70% to 2,271 and 0.9% to 3,195 respectively.
On the leader board part-nationalised lender Royal Bank of Scotland was a high-flyer early on after its first-quarter results. The group is to repay the final tranche of notes issued under the government's Credit Guarantee Scheme (CGS) next week, after posting a profit of more than a billion pounds in the first three months of 2012.
Excluding own credit adjustments, pre-tax profit totalled £1.05bn, and shares were up 2.65% to 25.20p in London this morning in reaction.
Additional reporting by ShareCast.
The majority of financial advisers (85%) believe the number of self-invested personal pension (SIPP) providers will continue to fall in the coming year, according to Dentons Pension Management research.
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