The biggest faller in early trading (1041) was Lloyds Banking Group (LLOY.L) which dropped 8.4 per cent to 53.16p after it revealed a £3.2 billion provision for payment protection insurance.

The provision - for potential costs or redress for payment protection insurance (PPI) customer mis-selling claims - led to the bank announcing a statutory pre-tax loss of £3.5 billion for the first quarter.

The loss also includes £333 million integration costs relating to the HBOS acquisition, while negative insurance volatility also had a £77 million impact on losses.

The latest one-off integration costs bring the total since the acquisition of HBOS to more than £3 billion, relating to severance, IT and business costs.

Schroders (SDR.L) saw both its voting and non-voting share classes fall, dropping by 5.1 per cent to 1,776p and 4.7 per cent to 1,450p, respectively.

The asset manager dropped despite reporting an increase in pre-tax profit during the first quarter, rising to £103.8 million, compared with £93.2 million in the prior-year period.

It also saw net inflows of £3.1 billion, while total funds under management increased to £201.4 billion. However, the group reported inflows had slowed as market volatility impacted on retail investor demand.

Royal Bank of Scotland Group (RBS.L) dropped 4.5 per cent to 39.84p, while Vedanta Resources (VED.L) shed 2 per cent to 2,175p.

Medical devices company Smith & Nephew (SN.L) was the strongest riser, adding 2.7 per cent to its share price of 677.5p.

The company had earlier announced a rise in revenue to more than $1 billion during the first quarter of the year, but reported a decline in trading profits.

Packaging company Rexam (REX.L) increased by 1.8 per cent to 390.2p as microchip manufacturer Arm Holdings (ARM.L) rose 1.3 per cent to 565.5p.

British American Tobacco (BATS.L) and Randgold Resources (RRS.L) both increased by 1.2 per cent to 2,685p and 5,030p, respectively.

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