Britain's FTSE 100 index fell early on Monday, with miners leading the losers as Rio Tinto announced production cuts, while banks rose with HSBC rebounding to snap a seven-session losing run.
At 0846 GMT, the FTSE 100 index was down 25.29 points, or 0.6 percent at 4,261.64. The UK blue chip index closed down 1 percent on Friday.
"The market is on the downside today. I think the negative news from Toyota has tested confidence, this is the second profit warning from the group and highlights the weakness in the U.S. and Europe," said Keith Bowman, analyst at Hargreaves Lansdown.
"If a manufacturer like Toyota is seeing difficulties does not read particularly well for the rest."
The world's biggest carmaker said on Monday it expects the first full-year group loss in its history in fiscal 2008 due to the relentless global slide in car sales and a crippling rise in the yen.
Meanwhile, two key members of the Bank of England's Monetary Policy Committee said monetary policy alone cannot help the economy avoid some of the worst consequences of the global credit crunch.
Miners took the most points off the index. Rio Tinto fell 2.4 percent after it said it is in the process of shutting down all it iron ore mines in Australia's Pilbara region for two weeks to cut production by 10 percent by year-end in the face of declining demand from steel mills.
Antofagasta, BHP Billiton, Vedanta Resources and Xstrata were down between 0.9 and 6 percent.
Energy stocks retreated as crude traded at around $43 a barrel. BG Group, BP and Royal Dutch Shell were down 0.7-1.1 percent.
Cairn Energy gained 1.2 percent after Cairn India said it had made an oil and gas discovery near its existing field in the western Indian state of Rajasthan.
BANKS GAIN
Banks were the top risers, although stocks within the sector were mixed. HSBC, Royal Bank of Scotland and HBOS were up 1.1-5 percent.
Barclays lost 1.6 percent. Its Chief Executive John Varley told BBC television that bank lending will take 1-2 years to return to normal, and asset prices need as much as 18 months to stabilise.
The group is also considering selling its private equity arm to a management consortium in a move to raise capital, the Mail on Sunday newspaper reported.
ITV was nearly 2 percent higher after the Daily Telegraph said the group is asking production companies to cut up to 20 percent off the cost of some shows as the advertising downturn has put increasing pressure on the commercial broadcaster.
Small-cap Taylor Wimpey was up nearly 20 percent after the Daily Telegraph reported that the group is expected to get a reprieve from its lending banks on a covenant test due to take place in the first week of the new year.
