By Sara Sjolin, MarketWatch
LONDON (MarketWatch) -- Oil producers and miners dragged U.K.
stocks into negative territory Thursday amid turmoil on the broader
European bond and stock markets, as Moody's slashed Spain's credit
rating and investors awaited a key Italian bond auction.
The FTSE 100 index slipped 0.8% to 5,440.92.
Miners were among biggest decliners in the index. Fresnillo PLC
lost 2.5%, Xstrata PLC fell 3.6% and BHP Billiton PLC (BHP) slid
1.9%.
Oil firms were also adding pressure in London, with Royal Dutch
Shell PLC (RDSA) (RDSB) off 0.8%, BG Group PLC down 1.2% and Tullow
Oil PLC 2.4% lower.
Drops in the U.K. index tracked negative sentiment across Europe
following another day of surging bond yields for Spain and Italy.
Late Wednesday, Moody's Investors Service cut Spain's credit rating
to Baa3 from A3 and placed it on review for a further
downgrade.
In Italy, investors were waiting for bond-auction results later
in the day to signal the current state of market confidence in the
country's economy.
Back in the U.K., almost every stock headed south, with the
banking sector also among declining groups. Lloyds Banking Group
PLC (LYG) was off 0.7% and heavyweight HSBC Holdings PLC (HBC)
inched 0.5% lower.