Insurers were under pressure following weaker than expected trading at RSA, leading to sharp declines in rivals Direct Line and Admiral of 2.3% each.

Banks were also among the fallers with Royal Bank of Scotland shedding 3.1% to 247.6p and Lloyds falling 2.6% to 59.4p.

Around midday, the FTSE 100 dropped 0.5% to 7,506.

RSA Insurance struggled with higher weather-related costs and an underwhelming UK underwriting performance, leading to weak third quarter trading. Investors marked the stock 8.1% lower to 582.4p on the news.

Brent crude oil was up 0.3% at $82 per barrel.


Outsourcer Serco surprised investors after revealing full year trading will be better than anticipated with sales, profits and cash flow forecast to rise, triggering a 14.3% surge in the stock to 100.9p.

Shares in fantasy miniature specialist Games Workshop declined 4.7% to £37.65 after ex-chairman Tom Kirby sold approximately 550,000 shares at £36.50 per share.

Budget airline EasyJet said annual pre-tax profit will be between £570m and £580m, hitting the upper half of its previous guidance thanks to troubles at Ryanair and the demise of Monarch and Air Berlin. Despite the good news, the stock declined 2.1% to £12.97.

Investors focused on water firm United Utilities' decision to invest a further £80m this year to tackle higher demand, overlooking an anticipated rise in first half sales. Shares in the company were flat 693.6p.


On AIM, petrol forecourt retailer Applegreen returned from suspension and released the admission document on its takeover of UK motorway service operator Welcome Break. Shares in Applegreen accelerated 9.3% to 588p.

Parasite control products specialist TyraTech rallied 31.9% to 2.9p on a conditional merger deal with shareholder American Vanguard, which offered to buy the shares it does not already own for 3.1p per share.

The market approved of software supplier Ideagen's acquisition of Morgan Kai with the stock rising 0.7% to 161.1p.

Oil and gas explorer Savannah Petroleum surged 11.7% to 33.3p after reporting a good rate of drilling success in Niger and strong progress on the acquisition of specific assets from Seven Energy.

A first half loss and warning from restaurants operator Richoux that trading is not expected to improve in the second half dragged the stock 11.4% lower to 7.7p.