Fears over Spain's economy impacted Britain on Thursday as Santander UK's credit rating was downgraded just hours after David Cameron warned fellow European leaders that the eurozone must take "decisive action" to ensure stability.

Prime Minister David Cameron will hold his first face-to-face talks with newly-elected French President Francois Hollande on Friday as they join world leaders in the US for a G8 summit set to be dominated by the eurozone crisis.

London's benchmark FTSE 100 index sank in opening deals on Friday as investor sentiment was rocked by a ratings downgrade for Greece and also for 16 Spanish banks, ahead of a crucial G8 gathering.