Commodity sector gains fail to lift Footsie out of the red

The FTSE 100 Index clawed back losses of more than 60 points at one stage to end the day 16.91 points lower at 5586.61 as gains for commodities firms helped to offset some of the losses elsewhere.

Markets have been sent into turmoil after ratings agency Standard & Poor's slashed Greece's sovereign debt to junk status on Tuesday.

It also sparked worries over contagion by downgrading Portugal due to the "amplified risk" faced by its own economy – and cut its rating on Spain just before the market close.

Investors are worried that German demands for strict conditions will prevent Greece from getting the money it needs to avoid defaulting on its debts.

America's Dow Jones Industrial Average lifted slightly in choppy trading amid strong earnings figures and ahead of the latest decision from the Federal Reserve, which is expected to hold a key interest rate at historic lows.

While the world's biggest economy is crawling out of its deepest recession in decades, Fed officials have said the recovery remains wobbly and they have warned that the jobless rate is likely to remain uncomfortably high for a long time.

Data released on Tuesday showed that US house prices rose on an annual basis for the first time in more than three years in February and that US consumer confidence rose to a one and a half year-high in April.

Other reports have shown stronger retail sales and factory activity, and hiring by US employers in March at the fastest rate in three years. However, inflation has been negligible.

But Europe's markets remained firmly in the red, however, with the Dax in Germany down 1.2 per cent and France's Cac 40 off 1.5 per cent.

Fears over the stability of the eurozone have put the single currency under strain in the last few days, while investors have sought a safe haven in the US dollar.

The pound has also been hit in the market uncertainty – falling to 1.15 against the euro and 1.51 against the dollar.

Financial stocks came under more pressure amid worries over their exposure to Greek sovereign debt, with Royal Bank of Scotland off 1p to 55p, Lloyds Banking Group 1p lower at 671/8p and Barclays 51/4p cheaper at 352p.

Engineering giant Rolls-Royce was also down 14p to 576p after a trading update which said first half sales and profits would be flat compared with 2009. The group said the Iceland volcano disruption had put additional pressure on its European aviation customers.

Meanwhile, a number of top-flight stocks turned ex-dividend, meaning shareholders do not qualify for the latest payout. Publisher Reed Elsevier and British Gas parent Centrica were two of the biggest fallers, losing 21p to 509p and 15p to stand at 2961/4p respectively.

Argos owner Home Retail Group was, meanwhile, down 37/8p to 2771/8p amid worries from brokers at Arden Partners over increased competition from Wal-Mart's Asda as well as other electrical retailers.

In corporate news Royal Dutch Shell announced a 49 per cent surge in first quarter profits, to 4.9 billion US dollars (3.2bn).

The firm, along with rival BP, has benefited from higher oil prices. Shell shares advanced 471/2p to 19691/2p, while BP added 15p to 625p.

The biggest Footsie risers were BG Group up 42p to 1110p, Randgold Resources ahead 175p to 5330p, Old Mutual up 31/4p to 116p and Royal Dutch Shell.

The biggest Footsie fallers were Centrica, WPP off 32p to 673p, Tesco down 18p to 4305/8p and Reed Elsevier.