UK stocks : FTSE closes down 1.1 pct

Stocks

UK stocks closing: UK shares fell on Wednesday, testing a two-month low but failing to break a main support level as growth fears in Europe led stocks that are vulnerable to a downturn in economic activity lower.

The FTSE 100 index was down 1.1 percent at 5,722.01 points at the close, having gained 0.3 percent in the previous session after a late rally when the U.S. market opened.

Although U.S. stocks opened higher again, it was not enough to lift UK shares as investors focused squarely on Europe.

The rally late in the day yesterday was only to do with the U.S. rallying. We started off better today on Cisco's numbers but that was not good enough to hold it, said Andy Ash, head of sales at Monument Securities.

There's a lack of good news, and I think people's attention is focusing on Europe, whereas previously they'd been concentrating on the fiscal cliff and the U.S. election, and they're suddenly realising nothing has been sorted out here at all. I think it is Europe which is beginning to rattle people again.

A co-ordinated general strike on the Iberian peninsula has returned the euro zone and its challenges to centre-stage just as data showed the recessions in Greece and Portugal intensifying.

The euro zone remains a threat to the UK economy, according to Bank of England Governor Mervyn King, who said Britain faced the rather unappealing combination of a subdued recovery with inflation ... above target.

The energy and materials sectors, which include oil, gas and mining companies, usual considered 'cyclical', combined to knock more than 30 points off the FTSE 100.

Evraz was the biggest faller, losing 7 percent, followed by another resources company, Eurasian, which lost 5.1 percent. Eurasian is the worst performing FTSE 100 stock this year, down around 57 percent, Thomson Reuters data showed, with its latest results pointing to pressure from weaker markets and rising costs.

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