By Ben Simmons

London's blue chip index fell sharply in early trading on Monday after a G20 meeting failed to alleviate concerns over the economic crisis in Europe.

Essar Energy and the miners leading the downside, while the reaction to HSBC's full-year results was, on the whole, rather muted.

G20 told Europe that it must first work on raising more funds itself if it expects to receive more financial assistance from the rest of the world. Based on their communiqué published on Sunday, at last weekend's meeting of Finance Ministers and Central Bank Governors, the G20 members were content to pat themselves on the back for having "been actively engaged in taking the steps needed to safeguard the global financial system and to avoid adverse scenarios".

Yet their discussion on the possibility of increasing the International Monetary Fund's resources was put off as they await "essential input", mainly for the euro are countries to "reassess the strength of their support facilities in March". Currently under discussion in Europe is the possibility of merging the temporary and permanent bailout funds, known as the EFSF (European Financial Stability Facility) and ESM (European Stability Mechanism), respectively. The ESM is supposed to replace the EFSF, but a possible merger would increase this firewall from €500bn to around €750bn.

The idea's main opponent is Germany. The Eurozone's motor of growth is worried about footing the bill for the crisis when the root problems have not been snipped out.

Also weighing on sentiment was the price of oil. Brent crude futures were down 0.89% at $124.36 by 08:41 on the InterContinental Europe Exchange, but the recent surge has seen the price come near to its highest level since 2008 due to Iran-related supply concerns. Thoughts are now turning to the effect that elevated prices will have on the recovery in Europe.

At the weekend, the Managing Director of the International Monetary Fund (IMF), Christine Lagarde, said that the global economy is "still not out of the danger zone" - "The G20 countries must now strengthen resilience to further shocks that could result from the still-fragile financial systems, high public and private debt, and higher world prices...Of equal concern is unemployment, which is still too high in many countries," she said.

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