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LONDON (AFP) – London shares closed sharply lower on Tuesday, hit by concerns over how Ireland's debt problems can be resolved and the prospect of slower growth in China, a key driver for global momentum.

The FTSE 100 index closed 2.42 percent lower at 5,681.90 points.

EU officials said Brussels was holding talks with the IMF and the European Central Bank to resolve the Irish banking crisis, which has shaken markets and put other weaker eurozone members such as Portugal under growing pressure.

Comments by China's central bank governor on problems such as speculative fund inflows and rising inflation spooked investors, with Shanghai stocks slumping badly again on fears policy will tighten.

Given China's crucial role as a growth driver, stocks fell in Asia with a knock-on effect in Europe and then Wall Street.

Back in London, Lloyds Banking Group (LBG) was the most traded stock, seeing 193 million shares switch owners, followed by Royal Bank of Scotland (RBS), which saw 93 million units change hands.

Global consumer packaging group Rexam was the top blue-chip performer, adding 7.2 pence -- or 2.32 percent -- to end at 318.2, followed by engineering multinational GKN, which rose 1.6 pence -- or 0.89 percent -- to end at 181.6.

Fresnillo led the fallers, shedding 92 pence -- or 6.33 percent -- to end at 1,361, followed by fellow miner Kazakhmys, which was down 93 pence -- or 6.14 percent -- to end at 1,421.

Elsewhere, the pound fell further against the dollar and the euro.

At 17:04 GMT, sterling was trading at 1.588 dollars, down from 1.606 at the same time on Monday, while the currency stood at 1.175 euros, down from 1.179 over the same period.

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