Positive Chinese data offset by eurozone woes

Investors were buoyed by stronger-than-expected economic data from China yesterday (July 23rd), but this was not enough to support the UK's blue chip index.

China's manufacturing activity contracted at its slowest pace for five months in July, which has raised hopes that recent financial stimulus measures are starting to have a positive impact.

However, fears over the state of the eurozone continue to weigh down on traders' confidence.

Reuters reports that the FTSE 100 dropped by 12.33 points this morning, which is the equivalent of 0.2 per cent.

This followed on from a sharp 2.1 per cent decline on Monday and economists confirmed the index had fallen below its 200-day moving average.

British lenders are susceptible to the financial turmoil in the eurozone and the ongoing uncertainty saw UK bank stocks fall.

Investors are worried that Spain may require a full sovereign bailout and this has been a major factor in the FTSE 100's inability to stay above the 5,700 threshold so far this week.