European markets fell sharply on Friday amid concerns over the troubled Spanish banking sector.
At close, the FTSE 100 was down 1.1 per cent to stand at 5,651.77, with Resolution, Royal Bank of Scotland and Barclays all among the biggest fallers.
The French Cac 40 and the German Dax were also down 2.1 and 1.9 per cent respectively. In Spain, the IBEX was down 5.8 per cent at close.
The FTSE eurofirst 300 was down 1.4 per cent.
The falls come despite Eurozone finance ministers having unanimously agreed to offer assistance to Spain so it can recapitalise its debt-laden banks. Spain requested assistance from Europe on June 25. The package could be as large as £77.8bn, although its exact size is not expected to be disclosed until Madrid is given an audit of the country’s banks.
The yield on 10-year Spanish government generic bonds rose to 7.3 per cent at one point on Friday, a level considered unsustainable over the long term.
The euro also fell to its lowest against the dollar since June 2010 on Friday. The single currency fell as low as $1.2143 against the US dollar.
As European markets continued to react to the ongoing fall-out from the sovereign debt crisis, US markets saw a slight decline after the Philadelphia Federal Reserve reported its latest set of manufacturing data. Although, the Philadelphia Fed reported a slowing of contraction in the Mid-Atlantic manufacturing sector, it remains unclear whether it will slow in the US as a whole.