- UK GDP contracts in the fourth quarter.
- BoE unanimous in decision to maintain rates.
- Mortgage approvals rise.

In spite of a strong start, London's FTSE 100 experienced a sharp decline in morning trade following some disappointing gross domestic product figures which came in worse than expected. Banks were leading the fall by lunchtime.

The UK economy contracted at an 0.2% quarterly rate in the fourth quarter, according to the latest data out this morning from the Office for National Statistics. Consensus were looking for a fall of 0.1%.

"While these figures reveal significant weakness in the economy, we do not think they mark the start of an inexorable slide into a severe recession," said Barclays Capital analyst Blerina Uruci. "While a technical recession cannot be ruled out, the signs are that the economy is turning the corner slowly and there is little evidence to support predictions of a deep recession," she said.

Meanwhile, the decision taken by the members of the Bank of England's (BoE) Monetary Policy Committee to maintain the current policy settings at the last meeting was a unanimous one. At first glance the minutes of the meeting seem to point to a central bank which saw significant risks to economic activity while there remained some doubts about the pace at which inflation would continue to converge with their target, in the near-term above all, although they did believe that it would do so.

In other economic news, gross mortgage lending totalled £9bn in December, the strongest month of 2011 and 12% higher than the December 2010, according to the British Bankers' Association (BBA), as mortgage approvals rose more than expected.

BANKS TUMBLE AFTER WEAK ECONOMIC DATA

Banking heavyweights RBS, Barclays, Lloyds, HSBC and Standard Chartered were among the worst performers on the blue chip index, pulling it down to its worst levels of the day after the disappointing GDP figures. RBS was also being pressured lower by UBS which downgraded the stock from buy to neutral.

Ashmore was the best performer, rising over 5%, bouncing back after a poor performance yesterday on the back of a downgrade from Royal Bank of Scotland.

ARM Holdings, the chip designer for many Apple products, was up 4% after Apple's quarterly figures showed robust demand for its trendy iPhones, iPads and Macs. Net income rose to $13.1bn in the first quarter of the company's fiscal year, more than double the $6bn achieved in the first quarter of the previous year. Putting the cherry on the top, Apple also raised earnings guidance for its second quarter.

Industrial engineer Weir was a high riser after agreeing to acquire US oil and gas pump valve maker Novatech for $176m (£113m) in cash. Weir is looking to further strengthen its presence in the US unconventional oil and gas markets following the recent $675m acquisition of wellhead solutions provider Seaboard Holdings which was completed in December. Sector peer IMI was also in demand.

FTSE 250 MOVERS: RENISHAW ROCKETS AFTER INTERIM RESULTS

Renishaw, the measurement and medical device manufacturer, surged in early trading after revenues rose 11% in the first half. Geographically, revenue in Europe increased by 25% over the comparable period and the Americas were ahead by 23%.

Bookshop and newsagent chain WH Smith was in demand as the decline in like-for-like sales eased in the final month of 2011. An improvement had been expected over the longer period, however, given that the company was facing soft comparatives from December 2010, when the UK was hit by severe weather conditions which made travel difficult.

Soft drinks maker and bottler Britvic said carbonated drinks put some fizz into its Christmas trading, with revenues rising 2.5% in the final three months of 2011. Shares edged higher.

BC

FTSE 100 - Risers
Ashmore Group (ASHM) 373.50p +5.21%
ARM Holdings (ARM) 603.00p +3.97%
Weir Group (WEIR) 1,981.00p +2.80%
Land Securities Group (LAND) 692.50p +1.54%
Evraz (EVR) 440.80p +1.40%
Shire Plc (SHP) 2,148.00p +1.32%
Hammerson (HMSO) 386.70p +1.31%
Diageo (DGE) 1,426.00p +1.24%
Whitbread (WTB) 1,678.00p +0.96%
InterContinental Hotels Group (IHG) 1,313.00p +0.69%

FTSE 100 - Fallers
Royal Bank of Scotland Group (RBS) 26.14p -3.36%
Lloyds Banking Group (LLOY) 30.71p -3.06%
SSE (SSE) 1,224.00p -2.31%
Barclays (BARC) 213.80p -2.15%
Tesco (TSCO) 323.15p -2.08%
HSBC Holdings (HSBA) 529.70p -1.93%
ICAP (IAP) 332.20p -1.86%
Royal Dutch Shell 'A' (RDSA) 2,275.50p -1.73%
Johnson Matthey (JMAT) 2,013.00p -1.71%
Carnival (CCL) 1,956.00p -1.71%

FTSE 250 - Risers
Renishaw (RSW) 1,363.00p +18.01%
Halfords Group (HFD) 323.90p +5.16%
Savills (SVS) 325.00p +4.20%
Regus (RGU) 93.85p +4.10%
Ashtead Group (AHT) 230.30p +3.88%
Imagination Technologies Group (IMG) 572.50p +3.71%
WH Smith (SMWH) 550.50p +3.48%
Gem Diamonds Ltd. (DI) (GEMD) 210.00p +3.24%
Laird (LRD) 168.40p +2.93%
Britvic (BVIC) 345.10p +2.71%

FTSE 250 - Fallers
Berendsen (BRSN) 439.90p -4.54%
PZ Cussons (PZC) 285.00p -3.72%
Hunting (HTG) 801.00p -3.49%
Talvivaara Mining Company (TALV) 333.10p -2.89%
Merchants Trust (MRCH) 371.60p -2.47%
Centamin (DI) (CEY) 94.90p -2.42%
FirstGroup (FGP) 303.60p -2.32%
Domino Printing Sciences (DNO) 571.00p -2.14%
National Express Group (NEX) 217.10p -2.12%
COLT Group SA (COLT) 88.70p -2.10%

Related share prices
Barclays (BARC) share price
HSBC Holdings (HSBA) share price
Lloyds Banking Group (LLOY) share price
Royal Bank of Scotland Group (RBS) share price
Standard Chartered (STAN) share price
ARM Holdings (ARM) share price
IMI (IMI) share price
Weir Group (WEIR) share price
Renishaw (RSW) share price
Britvic (BVIC) share price
WH Smith (SMWH) share price
Ashmore Group (ASHM) share price