Apart from the negative impact of disappointing earnings data, dealers were nervous before a speech by Federal Reserve Chairman Alan Greenspan to Congress later on Thursday which would be scrutinised for any hints on further interest rate rises in the United States. Prior to that, the latest European Central Bank meeting around midday is expected to leave interest rates in Europe on hold and to have little effect on the stock markets.

In London, prominent fallers included British Airways that slid seven pence to 381 pence following reports the US government is threatening to block the company's planned merger with KLM Royal Dutch Airlines unless it achieves a breakthrough in the open skies negotiations with Britain. Marks and Spencer extended Wednesday's declines that followed the announcement of disappointing sales.

Early on Thursday, the share fell a further five pence to 229.5 pence. Among the gainers, market heavyweight Vodafone continued to make headway, rising another five pence to 317 pence. Also strong, was the South African IT company Dimension Data Holdings that is switching its main share listing to London. Unconditional dealing is set to begin on July 31. Meanwhile, in conditional trading the share rose two pence to 565 pence.