The FTSE 100 index closed down 26 points or 0.5% at 5,671 on Wednesday, while the FTSE 250 index ticked up 25 points or 0.2% to settle at 10,373. See which stocks fuelled the gains and which triggered the losses on Morningstar's Heat Map.
Fitch Ratings today cautioned that the European Central Bank needs to play a larger role in purchasing sovereign debt from the struggling eurozone nations to prevent a collapse of the currency.
Meanwhile, German chancellor Angela Merkel said that the country might devote more funding to the eurozone's bailout fund, the European Stability Mechanism, as moves to improve the the current fund, the European Financial Stability Facility, have not been as successful as expected. Markets also feared slowing growth in Germany's economy, which has been one of the European Union's strongest in recent years. Although the nation's economy is expected to have expanded by 3% in 2011, it is still lower than the 3.7% growth in 2010, and the economy may have shrunk in the fourth quarter, as well.
In London, the World Economic Forum warned of fiscal imbalances and severe disparities in income as being some of the main risks to global growth.
U.S. markets will be keeping an eye on the release of the Federal Reserve's Beige Book, which will come after the U.K. market has closed.