The UK government is understood to be prepared to shoot down proposals for a financial transaction tax being mooted by Germany and France.
Asian shares rose for a third day but closed lower than expected as European leaders failed to reveal specific plans to tackle the debt crisis after a meeting yesterday.
Updated: The FTSE 100 got off to a weak start on Friday but stablised by mid-morning following efforts in several European countries to calm volatility in share trading.
US markets yesterday managed to recover some of their losses from the previous seven days as better than expected jobs data boosted sentiment.
A deal by US lawmakers to raise the country's debt ceiling passed its first hurdle last night but failed to lift shares after dreadful manufacturing data.
News Corp's shares jumped 5.5% following yesterday's parliamentary hearing with the group's chiefs Rupert and James Murdoch.
Markets look set for another day of falls as investors fear sovereign debt problems in the US and eurozone could prompt another global crisis.
The FTSE 100 fell below the 6,000 level in mid-morning trading as European markets absorbed Moody's downgrade of Portuguese debt to 'junk' status.
Standard & Poor's has warned proposals put forward by French banks to rollover Greek debt would effectively mean the country is in default.
Nervous markets were further soothed yesterday as Greek MPs passed a law to implement strict austerity measures in a second round of voting.