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Proving the only winners yesterday were Barclays gaining 3.15 to 262.95p and HSBC putting on 0.3 to 651.4p.

Even the drug makers were feeling under par, with Shire falling 45p to ￡15.22. GlaxoSmithKline and AstraZeneca shed 36p to ￡12.24? and 50p to ￡30.23 respectively.

Shire's slide came as analysts at Jefferies cut their rating to “hold” from “buy”.

Although Shire is on course for strong earnings-per-share growth, which analysts said made Shire one of the most attractive global pharmaceutical stocks, the broker thought this growth spurt was already priced in.

They also highlighted risks that could curtail ongoing performance for Shire, which has recently gained market share thanks to production problems at its American rival Genzyme.

Analysts pointed out that Shire’s manufacturing capacity is constrained until its new production facility in Lexington comes online, adding that there is uncertainty over when this new site will be approved by the regulatory authorities.

Amongst other risks faced by Shire, according to Jefferies, is a Food and Drug Administration review of cardiac safety in relation to attention deficit hyperactivity disorder drugs, due in the first quarter of next year. However, the broker added that it expected the outcome to be “relatively benign for Shire”.

In terms of opportunities for the company, analysts pointed to the chance to break into the attention deficit market in Europe - an opportunity which they said was “largely untapped by Shire”.

Elsewhere, Aim-listed broadband satellite operator, Avanti Communications, hurtled up 72p to 725p after announcing the launch of its HYLAS 1 satellite. Analysts at Daniel Stewart said the launch “effectively launches Avanti itself as a satellite- based communications provider rather than a start-up”.

3.15pm: Weak start on Wall Street sends FTSE 100 further into red

Europe's debt crisis infected sentiment on the other side of the Atlantic too, with the Dow Jones Industrial Average losing around 136 points to 10959.06.

Hewlett Packard and McDonald's were amongst the biggest fallers in the US, while Amazon ticked up after the National Retail Federation reported a 6.4pc rise in retail sales over the Thanksgiving holiday weekend.

But news of ringing tills failed to rouse the markets on either side of the Atlantic. With Wall Street on the slide, the FTSE 100 continued on its downward trajectory, shedding around 90 points to 5578.16.

2.30pm: HSBC amongst few stocks on the ascendant

HSBC climbed up a brief leaderboard, gaining 4.9 to 656p as the wider market fell back. The FTSE 100 slipped further into negative territory, shedding around 69 points to 5599.74.

HSBC's rise came despite a downgrade from Ian Gordon, an analyst at Exane BNP Paribas, who cut the bank to "underperform" from "neutral".

Mr Gordon described HSBC as a "safe port in the storm", but asked "perhaps time to edge back out to sea?"

He said that as HSBC had outperformed the other banks during the recent sector pull-back, there were now more “enticing entry levels” offered by Lloyds, Barclays, Deutshce Bank, the French banks “and even RBS”.

Topping the leaderboard, however, was TUI Travel. The holiday operator, which is due to unveil full-year results this week, said it was selling its Thomson Al Fresco business to Homair Vacances. At September 30 last year, the net book value of the assets was ￡10.3m.

Elsewere, Costain slid 11.25 to 198.75p after the construction company said it was in talks with contractors over the financing of an energy-from-waste facility in London after one of them filed for insolvency.

Analysts at Panmure Gordon said:

"The insolvency of the Swiss operator AE&E Inova is unhelpful for the completion, and payment to Costain, of the Belvedere waste to energy plant. Further clarification of the situation is needed before we do anything to our numbers. UK energy policy remains high on the infrastructure agenda; we hope that a sensible solution is found to ensure ongoing sector activity."

12 noon: Resolution caught in the bears' clutches

Resolution was amongst the laggards thanks to a bearish note from JP Morgan Cazenove. The broker started coverage of Clive Cowdery’s insurance buy-out vehicle with an “underweight” rating and a 254p target price.

“While we acknowledge that the poor share price performance of Resolution since launch in 2008 (down 41%) has left the shares undervalued, we think that there are much better stories elsewhere in the sector,” said analysts.

Last year the company bought Friends Provident and in June, Resolution clinched a deal to buy AXA’s UK life insurance businesss.

“We see some industrial logic for the AXA / Friends Provident combination but still think the combined group is one of the least attractive of the listed names from both a cash flow and operating perspective. We see the AXA asset as having the inherited estate (i.e. capital) but less attractive earnings capacity ex this,” said the broker.

Resolution shed 5.7 to 219.4p while the FTSE 100 pared back some of its losses, falling around 15 points to 5653.8.

However, the banks gained some ground in the wake of the Irish bail-out with HSBC putting on 13.3 to 664.4p and Royal Bank of Scotland rising 0.49 to 39.18p.

The FTSE 250 also lost around 15 points to 10793.95. Bucking the trend was Punch Taverns on speculation it could hand over almost 6,000 pubs in an attempt to reduce its ￡3.1bn debt pile.

Analysts at Liberum Capital, who have a "hold" on Punch, said:

"This suggests that new CEO Dyson may withdraw support to the entire tenantedbusiness and hand the pubs over to bondholders.

"This would mean retaining the PLC cash (c40p per share) and diverting it to improve managed pub business (Spirit). This could be worth >40p per share, albeit this is a very subjective valuation."

Punch gained 3.5 to 62.6p.

11.10am: FTSE falls back on debt contagion worries

Having made early gains, the FTSE 100 headed south as the morning wore on. The blue-chips shed around 24 points to 5644.11 as debt contagion worries persisted.

Ben Critchley, a sales trader at IG Index, said: "It’s no secret why investors are still nervous - the worry is that Ireland won’t mark the end of the eurozone crisis and with the economies of Portugal and Spain looking less than robust markets are worried that we could be talking about potential bailouts once again in the not too distant future."

9.30: Irish bail-out gives blue-chips a lift

Royal Bank of Scotland, which is exposed to Irish debt, rose 3.6pc. Barclays, Lloyds, Standard Chartered, HSBC also gained.

The FTSE 100 was up 46 points - or 0.8pc - at 5715 in early trading.

Shares in software firm Autonomy dropped 0.8pc, after falling as much as 9pc last Wednesday when it said talks on a deal it is pursuing had given rise to an additional opportunity, which may cause a delay in its timetable.

Asian markets were mixed in light trading on Monday as they waited to see the impact of a bailout for Ireland and amid caution ahead of a slew of economic data from the US this week

Oil prices rose above $84 a barrel as investors looked to this week's key jobs report for evidence that the US economy is imporoving. Manufacturing, vehicle and retail sales figures for November will also be released, along with factory orders for October.

In currencies, the dollar was up against the yen and the euro.

Tokyo's Nikkei added 0.8pc to 10,125, buoyed by a stronger dollar. South Korea's Kospi fell 0.3pc to 1,895.52 and Australia's S&P/ASX200 gained 0.4pc, to 4,618.

Hong Kong's Hang Seng was almost flat - up just 0.06pc at 22,890 - as were exchange in mainland China.

Also helping ease market tensions was news over the weekend that the European Union had agreed to €85bn in bailout loans for Ireland to help it weather its banking crisis.

The rescue deal means two of the eurozone's 16 nations have now come to depend on foreign help and underscores Europe's struggle to contain its spreading debt crisis.

The fear is that with Greece and now Ireland shored up, speculative traders will target the bloc's other weak fiscal links, particularly Portugal. Underlying all those concerns is that the contagion would spread to Spain, a major economy whose implosion would have serious repercussions for the euro.

Worries about an escalation between the Koreas weighed on some stocks. Joint military exercises involving a nuclear-powered US aircraft carrier and a South Korean destroyer continued on Monday, nearly a week after a deadly attack on a South Korean island sent tensions soaring in the region.

Britain's FTSE 100 index is seen rising as much as 0.4pc - or 20 points - on Monday. It closed down 30 points at 5668.70 on Friday.

In New York on Friday, the Dow Jones fell 95.28, or 0.9pc, to 11,092. The S&P 500 index was down 8.95, or 0.8pc, to 1,189.40. The Nasdaq composite index fell 8.56, or 0.3pc, to 2,534.56. Overall, stocks ended the week mixed. The Dow ended 112 points lower, and the Standard & Poor's 500 index lost 10. However, the technology-heavy Nasdaq composite index gained 17 points for the week.

Monday's Market Report:

Malaise grips markets as FTSE 100 loses 2pc

Friday's Market Report:

Cold front ahead for retail sector, analyst warns, as FTSE 100 slides

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