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FTSE100 index falls on Thursday as European fears persist; Dow Jones and S&P 500 seen lower - UPDATE

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Britain's blue chip index was falling on Thursday as Eurozone fears persisted.

As at around 1.40pm, the FTSE100 was down 14 points to trade at 5,654  - having closed yesterday's session at 5,668.

The downward trend continued the theme of the yesterday after advancing on Tuesday as worries about last year continued to haunt the new, according to analysts.

"A combination of worries about Europe is taking its toll on markets and on the single currency this morning. The financial health, or otherwise, of the continent's banking system is under the spotlight...."commented Christopher Beauchamp, research analyst at IG Index.

Borrowing from the ECB by financial institutions is at near record levels while in Spain, fears are that the country lacks the money to support banks with bad loans on its own.

And of course, there is always Greece and its troubles standing in the shadows.

France's sale of debt passed despite major concerns about whether cash could be stumped up for the bonds. The French government sold 8 billion euros of various bonds and the 10-year auction attracted 6.61 billion euros of bids, producing a yield of 3.29 per cent - up from 3.18 per cent in a December sale

Looking across the pond to the US, data on employment will be the  main focus this morning as weekly jobs numbers are joined by numbers from ADP employer services December.

According to figures from Bloomberg News, the number of applications for jobless benefits fell last week, a report out later today may show. The data suggests that the US service industry may have been boosted at the end of last year.

US futures point to a lower open on Wall Street today with futures for the S&P 500 down 0.53 percent and  Dow Jones futures down 0.47 percent.

Analysts in the USA put this down to fears about the debt crisis in Europe.

UK corporate news

One of the biggest news stories of the day was from banking giant RBS as speculation circulated the bank was considering cutting 10,000 jobs in a widespread restructuring of its investment bank operations.

The cuts would affect more than half of the 19,000 staff at RBS’s investment bank and are part of plans being drawn up by chief executive Stephen Hester to scale back the division drastically, according to the FT. Shares in the bank did not move much and were down 0.77 percent - to 20.6 pence.

The biggest mover was Eurasian Natural Resources Corp - up 5.2 per cent - at 699 pence after it reached an agreement with First Quantum Minerals (LON:FQM) over the Kolwezi Tailings project, and the Frontier and Lonshi mines in the Democratic Republic of Congo, and to settle all current legal matters for US$1.25 billion.

Petrofac (LON: PFC) was one of the biggest risers - up 2.46 per cent  at 1,501 pence after it revealed an agreement with US peer Schlumberger where the groups can combine their respective areas of expertise.

Chip maker ARM Holdings (LON: ARM) was also up 3.5 per cent to change hands at 615.5 pence. Swiss bank UBS rates the stock a short term 'buy' and gives it a 12 month price target of 620 pence.

Smith & Nephew (LON: SN.) was among the biggest Footsie fallers -  down 2.64 per cent - after it said it was spinning off its U.S.-based biologics division into a joint venture.

The firm said it would provide a cash injection to the division to fund its search for innovative ways to heal joints. Biologics are drugs synthesized from living organisms or their products.

Next (LON: NXT) dropped  further 2.15 per cent to trade at 2,599 pence per share. Yesterday, the retailer revealed a lacklustre trading figures and warned that 2012 would be tough.

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