By Joanne Frearson
LONDON (Reuters) - Top shares fell early on Friday, down for a third day as fears about the sovereign debt crisis and worries that stricter financial regulations could dampen global growth grew, with banks and oil stocks hit hard.
By 9:15 a.m., the FTSE 100 fell 18.08 points or 0.3 percent to 5,055.26 after falling 1.7 percent on Thursday.
The index has lost 13.4 percent since fears escalated about the euro zone sovereign debt crisis in mid-April and is down 6.8 percent this year.
Banks continued their slide from the previous session, with Barclays (Barclays PLC), HSBC (Hsbc Holdings PLC), Royal Bank of Scotland (Royal Bank of Scotland Group () and Standard Chartered (Standard Chartered PLC) down 0.5 to 1.1 percent.
The sector was also struggling after the U.S. Senate, on Thursday night, approved a sweeping Wall Street reform bill for financial regulation. Changes proposed threaten to constrain the banking industry and reduce its profits for years to come.
The inability of euro zone leaders to agree on policy on the sovereign debt situation has heightened investor nerves this week, contributing to a 4 percent fall in the index since Monday.
"Weakness has set in again, it is general concern over the debt situation and the possibility of contagion," said Angus Campbell, head of sales at Capital Spreads in London. "There does not look like there is much light at the end of the tunnel."
On Friday, Germany is poised to approve the lion's share of a $1 trillion (693.6 billion pound) safety net for financially troubled euro zone nations as an EU task force looks to toughen regulations within the bloc blighted by a debt crisis that has cast a pall over global economic health.
ENERGY WEIGHS
Energy stocks were among the worst performers as crude weakened to below $70 per barrel on worries that Europe's debt crisis could hurt global economic growth and slow energy demand.
BG Group and BP slipped 1 percent and 1.5 percent respectively.
However, the mining sector was given a boost by a positive note from HSBC. The broker reiterated its "overweight" position on Rio Tinto (Rio Tinto PLC) and Anglo American (Anglo American PLC Ord USD0.54) which gained 0.5 percent and 1.4 percent respectively.
Xstrata (Xstrata PLC) rose 2.1 percent after it was upgraded to "neutral" from "underweight."
United Utilities gained 1.6 percent after the group reported underlying operating profit up 3 percent and Evolution Securities upgraded its recommendation on the stock, citing defensive qualities.
British Airways (British Airways PLC) was given a boost and gained 0.3 percent after it predicted a return to breakeven next year, helped by recovering business-class traffic, after it posted a record 531 million pound full-year loss, hit by strikes and winter snow.
(Editing by Jon Loades-Carter)