Blue chips were trading well in the red in the last full day before Christmas as concerns about the US fiscal cliff returned.

The concern was sparked by news the Republicans are to abandon a vote on an alternative plan to avoid the fiscal cliff as party members rebelled against the prospect of raising taxes for millionaires. Under the plans Republican leader John Boehner was hoping to win concessions from president Barack Obama on the fiscal cliff.

At 10.57am the FTSE 100 had lost 50 points, or 0.83% to stand at 5,908.

Banks were among those hit hardest by worries about the deadlock with BarclaysLloyds and RBS losing 2.75%, 2.6% and 2.58% respectively.

Other big fallers including Prudential, which lost 1.84% and mining duo Vedanta Resources and Eurasian Natural Resources, which lost 1.7% and 1.2% and respectively.

Elsewhere Aviva gained 0.55% to 381.9p after it netted £1 billion from the disposal of its US business.