BT's pension woes meant the FTSE 100 Index endured a disappointing finish to its strongest monthly performance in almost a year today.

London's top flight was 61.2 points lower at 6749.4, although progress in recent days ensured the rise of nearly 200 points during January was its best month since February last year.

BT dominated a disappointing session after the telecoms giant revealed its pension deficit had swollen to £7 billion.

The disclosure prompted the company to announce a 16-year recovery plan that will include £2 billion in payments over the next three years.

BT shares fell by more than 2% or 11.2p to 417.9p, even though it beat City expectations with third quarter profits up 13% to £814 million.

IG market analyst Chris Beauchamp said: "BT's decision to put its pension fund in order before embarking on more adventures wasn't quite the outcome investors had been hoping for, and as a result the shares languish at the bottom of the index."

Supermarkets were also strong fallers as Sainsbury's and Morrisons registered declines of 8.4p to 255.4p and 5p at 179.9p respectively. Tesco fell 2.25p to 224.75p.

The euro held firm against sterling, despite figures showing that consumer prices in the eurozone fell 0.6% in the 12 months to January, from 0.2% lower in the previous month.

Prices have been weighed down by the recent plunge in oil costs but the core inflation rate, which strips out volatile food and energy prices, was only plus 0.5%, compared with 0.7% previously.

Sterling was down slightly against the euro at 1.33 but stronger versus the US dollar at just above 1.50.

International Airlines Group was on the back foot despite an initial round of buying interest following a move by Qatar Airways to acquire a 10% stake in the British Airways owner for more than £1 billion.

The stock opened 2% higher but interest faded after IAG chief executive Willie Walsh described Qatar as a long-term shareholder. The Gulf carrier is also prevented from tabling a takeover approach because rules stop non-EU shareholders from owning more than 49% of European airlines.

IAG shares were later 19.5p lower at 544.5p as attention turned to potential difficulties in gaining clearance for the airline's takeover of Aer Lingus.

Other stocks under pressure included Severn Trent and United Utilities - off 47p to 2152p and 15p to 1027p respectively - after the pair this week reviewed their dividend growth in the wake of price settlements with Ofwat.

Elsewhere in the utilities sector, British Gas owner Centrica was 1.2p higher at 293.8p after broker UBS removed its sell rating on the blue-chip stock.

In corporate news, waste and recycling business Shanks rose 0.25p to 98.5p after it said it continued to trade in line with expectations, despite markets remaining challenging.

The biggest risers in the FTSE 100 Index were Rangold Resources up 265p at 5685p, Fresnillo up 36.5p at 899p, Tullow Oil up 14.1p at 365p and Dixons Carphone up 10.8p at 435p.

The biggest fallers in the FTSE 100 Index were International Airlines Group down 19.5p at 544.5p, Sainsbury's down 8.4p at 255.4p, Ashtead Group down 31p at 1088p and Morrisons down 5p at 179.9p.

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