While the attention had diverted away from Cyprus temporarily over the last few days - owing to the Budget in the UK and the FOMC decision in the States - concerns had returned with a vengeance on Friday morning, causing stocks to slip early on.
It seems that talks with Russia to provide additional financial assistance have failed and leaves Cyprus "staring down the barrel of a default this morning", according to Market Analyst Craig Erlam from Alpari.
The European Central Bank (ECB) said yesterday that it would pull emergency liquidity assistance (ELA) to Cyprus by Monday if the country does not present a 'Plan B'.
Michael Hewson from CMC Markets said: "This threat by the ECB is a very high stakes threat, because without the ELA programme the Cypriot banking system would collapse and take the economy with it, with the ever present risk that Cyprus could leave the Eurozone."
Reports this morning suggested that Cyprus could be looking to restructure two of its banks and force losses on big depositors, sparing those with deposits of less than €100,000 from any levies. This follows an overwhelming rejection of a proposed raid on all customer accounts earlier this week.
HomeServe drops on job losses; Mulberry plummets after profit warning
Home energy repairs group HomeServe was registering heavy losses early on after saying that a fall in customer numbers next year will lead to the loss of 300 jobs. Nevertheless, the firm said that it will likely meet forecasts for the year to March 31st.
High-end designer Mulberry also dropped sharply this morning after warning that due to weak trading since Christmas, profits and revenues for the year to March 31st will likely be below market forecasts. The company said that "disappointing" sales figures reflected a reduction in tourist spend in London. Sector peer Burberry also fell in sympathy.
Oil giant BP was a high riser after saying that it intends to carry out a share repurchase programme with a total value of $8.0bn. The decision to buy-back shares
follows the completion of the sale of BP's 50% interest in TNK-BP to Russian oil company Rosneft. The programme is expected to return to BP shareholders an amount equivalent to the value of the company's original investment in TNK-BP.
Closed life fund consolidator Phoenix gained after unveiling strong full-year results, underpinned by solid cash generation from its operating companies. Cash generation was £690m, at the upper end of the £600-700m target range.
Publishing and events group Euromoneywas lower after saying that due to the on-going difficulties in the Eurozone total revenues for the half year ended March 31st are expected to show a headline decrease of around 1.0% year-on-year.
FTSE 100 - Risers
AstraZeneca (AZN) 3,246.00p +3.61%
BP (BP.) 457.85p +1.88%
BT Group (BT.A) 270.50p +1.58%
Marks & Spencer Group (MKS) 393.00p +0.77%
British Land Co (BLND) 555.50p +0.73%
National Grid (NG.) 747.50p +0.54%
Serco Group (SRP) 632.50p +0.32%
Reed Elsevier (REL) 764.50p +0.26%
Sainsbury (J) (SBRY) 368.70p +0.22%
Diageo (DGE) 2,013.50p +0.10%
FTSE 100 - Fallers
Petrofac Ltd. (PFC) 1,441.00p -4.00%
Burberry Group (BRBY) 1,336.00p -3.68%
Aberdeen Asset Management (ADN) 407.60p -2.09%
Eurasian Natural Resources Corp. (ENRC) 288.90p -1.83%
Associated British Foods (ABF) 1,822.00p -1.78%
CRH (CRH) 1,467.00p -1.74%
ARM Holdings (ARM) 865.00p -1.54%
Rexam (REX) 516.50p -1.53%
Evraz (EVR) 228.10p -1.47%
Weir Group (WEIR) 2,235.00p -1.32%
FTSE 250 - Risers
Phoenix Group Holdings (DI) (PHNX) 625.00p +3.22%
New World Resources A Shares (NWR) 245.00p +1.83%
Home Retail Group (HOME) 157.40p +1.35%
888 Holdings (888) 164.60p +1.23%
Brown (N.) Group (BWNG) 419.90p +1.08%
Drax Group (DRX) 628.50p +1.04%
Bank of Georgia Holdings (BGEO) 1,468.00p +0.96%
Grainger (GRI) 138.80p +0.95%
BBA Aviation (BBA) 266.10p +0.76%
Intu Properties (INTU) 329.30p +0.67%
FTSE 250 - Fallers
Homeserve (HSV) 202.70p -9.10%
Daejan Holdings (DJAN) 3,460.00p -4.26%
Perform Group (PER) 482.00p -3.60%
Euromoney Institutional Investor (ERM) 905.50p -2.63%
Rank Group (RNK) 171.50p -2.56%
Playtech Ltd. (PTEC) 615.50p -2.53%
COLT Group SA (COLT) 126.00p -2.33%
Balfour Beatty (BBY) 242.10p -2.26%
Micro Focus International (MCRO) 659.00p -2.23%
ITE Group (ITE) 275.60p -2.13%