UK stocks: Britain's leading share index fell on Tuesday as the earlier tentative recovery rally triggered by hopes China would buy debt of Italy faded,while Cairn Energy slumped after its Greenland well came up dry. * FTSE 100 falls 0.9 percent * Cairn Energy drops on well disappointment * Banks reverse earlier session gains Cairn Energy shares dropped 8.7 percent to become the worst performer on the blue chip index after the company said it failed to find any oil in its well off the coast of Greenland. Britain's blue chip index had earlier gained after the Financial Times reported that Italy had asked the country to make significant purchases to help boost the fragile economy. Although Italian Economy Minister Tremonti met officials from a Chinese delegation last week it was unconfirmed what the nature of the meeting was. It is bargain hunting,but the gains look fragile,said Joshua Raymond,chief market strategist at City Index. The talk about China potentially buying Italian bonds is helping to calm markets,but in all honesty this can not be viewed as a long-term solution. Euro zone policymakers are yet to come up with a credible solution to the sovereign debt crisis,five-year Italian bond spread over German bonds are still near record highs,and there is growing concern over a possible Greek default. Banks reversed earlier session gains to become the second worst sector performers,with the FTSE 350 banks index down 0.5 percent. Royal Bank of Scotland fell 0.7 percent having earlier taken the top spot on the blue chip index,while Barclays and Lloyds Banking Group slipped 1.3 percent and 1.1 percent. The FTSE 100 index was down 43.42 points,or 0.9 percent,at 5,086.83 points at 0821 GMT. The index has lost 4.8 percent since Friday after Juergen Stark resigned from the European Central Bank highlighting the tensions over the handling of the euro zone sovereign debt crisis. It may only be a matter of time before the London market gives up its support and tests the 4,800 area again,Simon Denham,chief executive officer at Capital Spreads,said. Investors seem to be on a knife edge with the battle between bulls and bears finely balanced and at some point one group will gain the upper hand.
