By This Is Money Reporters
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5.30pm (CLOSE): Concerns about industrial reforms in China overshadowed optimism on the home front today as blue-chip shares took a slide.
The FTSE 100 Index fell 33.2 points to 6554.8 points as traders were spooked by China's need to unveil a mimi-stimulus package aimed at boosting its faltering economy.
The dip, which came after weakness on Asian markets overnight, built on a 33-point drop in the top-flight on Thursday.
Results: BSkyB shares fell today despite a 6 per cent rise in full-year profits, as investors booked profits.
Hefty falls for top-tier heavyweights including Rolls-Royce, Royal Bank of Scotland (RBS) and BSkyB also weighed on the index.
On the currency markets, the pound was flat against the dollar and the euro, at 1.54 US dollars and 1.16 euros at the close in London.
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In New York, the Dow Jones Industrial Average was down more than 100 points in early trading, with sub-par earnings announcements - including losses for online retailer Amazon - weighing on sentiment, as well as nerves over China.
Leaders in the world's second-biggest economy are driving through painful reforms in an attempt to reduce its reliance on investment and trade and shift it towards a more consumer-focused economy.
In London, the top flight has paused for breath this week after a run of strong gains, despite figures yesterday showing the UK economy grew by 0.6 per cent in the second quarter.
Shares in BSkyB fell by more than 3 per cent despite the broadcaster revealing a 6 per cent rise in full-year profits to ?1.26billion and a 12 per cent jump in the number of products its customers take.
While the update was in line with market expectations, it prompted investors to book profits following a 24 per cent rise in the company's share price over the past year. The stock was down 28p to 822p.
Rolls-Royce was also a big faller in the top tier, slipping 3 per cent or 40p to 1200p after a downgrade by Deutsche Bank following first-half results published on Thursday.
The brokerage flagged rising costs and poor cash flow as it cut its stance from sell to hold, wiping out most of yesterday's hefty gains by the stock.
Shares in RBS were also under pressure ahead of next week's first-half results as a management overhaul and increasing political interference saw investors book profits after a decent run.
The largely-nationalised bank is expected to make an announcement soon on who will replace respected boss Stephen Hester, after he was ousted by Chancellor George Osborne. Its shares were 10.1p weaker at 328p.
But publishing group Pearson, whose operations range from the Financial Times to school textbooks in the United States, was the FTSE 100's top riser after its half-year results beat expectations.
The group, which also co-owns publisher Penguin Random House, saw its shares rise 6% despite posting underlying profits of ?137million, down 26 per cent.
Its shares rose 77p to 1329p as Pearson said it is making good progress with shifting its focus to emerging economies and digital sales.
The biggest FTSE 100 risers were Pearson, up 77p to 1329p, Capita up 25.5p to 1022p, Standard Chartered climbing 20p to 1502p and Vedanta Resources ahead 13p at 1180p.
The biggest FTSE 100 fallers were Persimmon down 46p to 1219p, BSkyB off 28p at 822p, Rolls-Royce down 40p to 1200p and Royal Bank of Scotland down 10.1p to 328p.
3:00pm: London shares remain in negative territory this afternoon 30 minutes after the open on Wall Street as concerns over Chinese economic growth persist and weighed on optimism about domestic economic growth.
Leaders in the world's second-biggest economy are driving through painful reforms in an attempt to reduce China's reliance on investment and trade and shift it towards a more consumer-focused economy.
The Footsie is 0.4 per cent lower at 6,561.4 while in the US the Dow Jones Industrial Average is lower by 0.32 per cent, or 52.99 points, at 15,502.62.
Upbeat: BG Group today posted above-forecast second quarter profits
That was despite the fact consumer sentiment rose to its highest level in six years, with the Thomson Reuters/University of Michigan's final reading on the overall index climbing to 85.1 in July from 84.1 in June.
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12:15: Blue-chip shares were under pressure today as profit-taking and concerns about industrial reforms in China outweighed economic advances on the home front.
Spooked by China's need to unveil a mini-stimulus package aimed at boosting its faltering economy, the FTSE 100 Index followed weakness on Asian markets by dipping 15.4 points to 6572.5.
Hefty falls for top tier heavyweights including Rolls-Royce, Royal Bank of Scotland and British Sky Broadcasting also weighed on the index, adding to a 33 point fall by the FTSE 100 yesterday.
Leaders in the world's second-biggest economy are driving through painful reforms in an attempt to reduce China's reliance on investment and trade and shift it towards a more consumer-focused economy.
The top flight has paused for breath this week after a run of strong gains, despite figures yesterday showing the UK economy grew by 0.6 per cent in the second quarter.
Rolls-Royce was the top tier's biggest laggard, falling 4 per cent or 52.5p to 1187.5p after a downgrade by Deutsche Bank following first-half results published yesterday.
The brokerage flagged rising costs and poor cash flow as it cut its stance from sell to hold, wiping out most of yesterday's hefty gains by the stock.
Shares in RBS were also under pressure ahead of next week's first-half results as a management overhaul and increasing political interference saw investors book profits after a decent run.
The largely-nationalised bank is expected to make an announcement soon on who will replace respected boss Stephen Hester, after he was ousted by Chancellor George Osborne. Its shares were 9.35p weaker at 328.75p.
But publishing group Pearson, whose operations range from the Financial Times to school textbooks in the United States, was the FTSE 100's top riser after its half-year results beat expectations.
The group, which also co-owns publisher Penguin Random House, saw its shares rise 7 per cent despite posting underlying profits of ?137 million, down 26 per cent.
Its shares rose 91.5p to 1343.5p as Pearson said it is making good progress with shifting its focus to emerging economies and digital sales.
European shares also edged lower today, dented by an underperforming German DAX market which had already unsettled some investors this week with profit warnings from some of its leading companies.
The pan-European FTSEurofirst 300 index, which had risen to its highest level in nearly two months this week, fell by 0.1 per cent to 1,208.28 points in mid-session trading.
The euro zone's blue-chip Euro STOXX 50 index was up by 0.1 per cent at 2,743.79 points but Germany's DAX fared worse than rival markets as it fell 0.5 per cent to 8,259.54 points.
10:20:
Britain?s blue chip index is holding firm, supported by a crop of broadly in-line results from the likes of publisher Pearson, but is lacking a strong enough catalyst to re-test recent seven-week highs as concerns about Chinese economy persisted today.
The Footsie is trading 5.61 points higher at 6593.56.
Publishing group Pearson gained 5.3 per cent after confirming its full year outlook, while miner Anglo American added 0.6 per cent after posting a smaller than expected fall in profits and pledging steep cost cutting.
The FTSE's gains, though, were not enough to make up for a mixed performance in previous sessions, with the FTSE still on track to break a four-week long run of weekly gains after repeatedly failing to break through tough technical resistance around seven-week highs in the 6,660 area.
?The risk now is that momentum is flagging and that we fall to the base of the recent consolidation zone and that the ultimate break is lower ... A break below 6.540 and especially 6,515 would be bearish,? Mike van Dulken, head of research at Accendo Markets, said in a note.
Adding to the downside, BSkyB fell 1.4 per cent after the broadcaster announced a share buy-back size at the lower end of expectations. It forecast that the consumer environment will remain challenging and announced new investments which could dent next year's profit.
8:30:
The FTSE 100 is 11.50 points higher, or 0.17 per cent, at 6,599.45. It has opened 33.03 points higher, or 0.5 per cent, at 6,620.98, rising towards seven-week highs as it is cheered by a series of upbeat companies? results.
Shares in gas and oil producer BG Group rose by 2.4 per cent, offering the biggest single stock boost to the Footsie, as investors focused on the above-forecast second quarter profits and looked past the company's concerns about a regime change in Egypt.
Publisher Pearson and miner Anglo American also rallied after reporting results, up 3.9 and 2.7 per cent, respectively.
In the rest of Europe, fresh signs of increased mergers and acquisition activity pushed shares back up towards their highest level in nearly two-months, with some traders seeing more gradual gains on markets in the near-term.
The pan-European FTSEurofirst 300 index was up by 0.5 per cent at 1,215.21, while the euro zone's blue-chip Euro STOXX 50 index was up by 0.7 per cent at 2,758.91 points.
Andreas Clenow, hedge fund trader and principal of Zurich-based ACIES Asset Management, said he was putting on 'long' positions to bet on further gains for European equity markets.
?European equity markets may not be as strong as the U.S., but everything looks pretty healthy to me. Things are slowly moving up,? he said.
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