European bourses driven lower on a day of downgrades

Nick Serff, Market Analyst, City Index commented: "The FTSE closed down over 1.6 percent today, after a whole raft of negative news hit the market. Moody's Investor Service set the tone early this morning after describing the UK as weaker than its top rated peers. Sterling had already been under pressure, after comments made last night by Federal Reserve chairman Ben Bernanke on the state of the U.S recovery.

Fears over Dubai also resurfaced on Tuesday after Moody's cut the ratings of six Dubai linked issuers. Investor's confidence also took a knock on the news that Dubai World could take up to six months to pay off some of its debt.

Greece also had its debt downgraded by Fitch to BBB+ status. This was the first time in 10 years that the country's rating had dipped below A.

Trading in Royal Bank of Scotland was halted in early afternoon trade after the shares fell more than 10 percent. Worries that the board could resign over their bonus row with the government, panicked investors into dumping the stock."

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