THURSDAY MARKET CLOSE: Miners and banks weigh on top flight

Banking shares were also on the back foot after the US Federal Reserve blocked the Stateside units of Royal Bank of Scotland and HSBC from paying higher dividends or buying back their own shares, citing weaknesses in their capital planning.

The two heavyweight sectors took the most points off the benchmark FTSE 100 index, which ended the session 16.98 points lower at 6,588.32. It is down 3.3 per cent so far this month.

David Madden, market analyst at IG, suggested that banks had also been shaken by President Obama’s message to Vladimir Putin that tougher sanctions could be imposed on Russia.

“Even though UK banks have less exposure to Russian assets than eurozone banks, they are feeling the pinch as a war of words could lead to frozen assets,” he observed.

There was interest in the energy sector after regulator Ofgem announced plans for a full-scale competition probe.

Among the fallers, SSE slid 2 per cent, off 31p to 1,487p. There are fears that a potential two-year long investigation will have a damaging impact on investment decisions and profitability in the sector. However, Centrica, which owns Scottish Gas, was up 2.1p at 325.2p.

The disappointment over a lack of stimulus measures from China saw miners such as Fresnillo and Randgold Resources suffer losses, down 35p to 837.5p and 122p to 4,486p respectively.

Elsewhere, Thomas Cook edged 0.2p lower to 181.2p in spite of an upbeat assessment of trading in recent weeks from the group.

It said customer bookings for the summer season have shown an improving trend, with 50 per cent of holidays already sold – slightly higher than a year earlier.