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18 May 2012:

The FTSE 100 lost 0.82%, or 44 points, to 5,294 and the Mid-250 index gave up 0.99%, or 105 points, to 10,488 on Friday morning amid rising eurozone contagion fears.

Credit ratings agency Moody's downgraded 16 Spanish banks overnight including BBVA and the UK arm of Santander, which was downgraded by three notches from Aa3 to A3. The agency cited recession and high levels of bad debt on the banks' books as the motivation for the downgrades.

Spanish prime minister Mariano Rajoy warned that the cost of borrowing for the country could become "astronomical" as the yield on benchmark 10-year Spanish bonds narrowed six basis points to 6.311%.  

Wall Street and Asian markets closed in the red and European markets started another day on the back foot: Germany's DAX index shed 0.59% to 6,272, France's CAC 40 index trimmed 0.8% to 2,987, and the FTSEurofirst 300 index of top European shares reversed 0.89% to 973.

The euro slipped further against the dollar, down 0.08% to $1.267 and the pound trimmed 0.01% to $1.578.

In the US, the much-anticipated initial public offering (IPO) of Facebook will begin later in the day. Its share price has been set at $38 (£24), valuing the company at $104 billion (£65 billion) when it goes to market on the Nasdaq index. Chief executive and co-founder, Mark Zuckerberg, will see his stake in the company valued at $19 billion, making him one of the richest men in the world.

Pharma group GlaxoSmithKline was knocked back 4p, or 0.3%, to £14.05 as its 81% premium bid offer for Human Genome Sciences was rejected by its board of directors.

Miners weighed on the FTSE 100 index as Rio Tinto lost 59p, or 2.1%, to £27.96; Vedanta Resources shed 20p, or 2%, to 965p; and Xstrata fell 17.2p, or 1.8%, to 939p.

Kenmare Resources gave up 1.4p, or 3.3%, to 41.1p.

Telecoms provider BT Group rose 1.1p, or 0.54%, to 203p as analysts at Berenberg upped their target price from 220p to 245p and raised their outlook on the stock from "hold" to "buy".

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