European equity markets have given up all yesterday's gains as investors remain on the back foot ahead of today's EU summit.
The FTSE 100 was down 1.9% in mid-morning trading at 5,299, reversing yesterday's 1.9% gain, with France's Cac 40 and Germany's DAX both down 1.7% at 3,032 and 6,323 respectively.
Miners led the falls in London after the World Bank cut its China growth forecast for 2012 from 8.5% to 8.2%, its lowest level in a decade. Vedanta and Kazakhmys were the biggest fallers, dropping 5.6% each.
Banks across the continent were also under pressure as latest eurozone developments suggested a familiar stalemate is emerging amid reports Germany has again rejected the idea of collective eurobonds.
Former Greek Prime Minister Lucas Papademos also caused concern after telling Dow Jones the country had to stick with its austerity programme or else face a damaging exit from the single currency area.
In the UK, gilts strengthened and sterling weakened after minutes from the Bank of England's latest policy meeting revealed several members of its Monetary Policy Committee had given consideration to further quantitative easing.
Sterling extended early morning losses against the dollar following the publication of the minutes, breaking through $1.56 before recovering to stand 0.4% lower at $1.5705. Two-year and five-year benchmark gilt yields dropped to record lows of 0.267% and 0.786% respectively.
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