Vedanta Resources led the blue-chip risers on Tuesday on hopes it can take the pressure off its balance sheet with a corporate restructuring.

Widespread talk that the miner was looking to merge its Indian-listed subsidiaries, Sterlite Industries and Sesa Goa, sent the miner 7 per cent higher at £14.53. In response, Vedanta said it was reviewing options “to simplify and consolidate its corporate structure”.

A sale of Vedanta’s 55 per cent stake in Sesa Goa to Sterlite at current market prices would cut debt for the holding company by $2.4bn, Credit Suisse said.

But a deal would require shareholder approval that may not be easy to secure, the broker cautioned. In 2008, Sterlite’s minority shareholders forced Vedanta to abandon a similar rationalisation plan.

Vedanta’s deal last year to buy control of Cairn India raised its net debt to about $10.5bn, more than twice its market value, which has sparked concerns that the company could breach debt covenants if metals prices weakened.

The wider market was once again struggling for direction, with the FTSE 100 drifting back from a seven-month high. The index lost 0.3 per cent or 17.05 points to 5,928.20.

Russian steelmaker Evraz was the sharpest faller, off 4.6 per cent to 412¾p, after Alfa Bank advised taking profits. The Moscow brokerage was concerned by declining home sales in China, which it said represent 10 per cent of global steel demand and has been the market’s main source of growth since 2008.

Titanium miner Kenmare Resources was up 9 per cent to 61½p, with takeover rumours once again doing the rounds. Analysts have suggested Kenmare may be a target for a peer such as Rio Tinto or Iluka Resources, the Australian-listed mineral sands group.

Petropavlovsk rose 6 per cent to 738½p on expectations that a resource update due Thursday from the Russian gold miner would draw attention to positive exploration results from Pioneer, its largest mine.

“We believe that the size and impact of higher grade ore sources at Pioneer is underappreciated by the market,” said Nomura Securities. The resource statement update “could lead to a review of earnings expectations and a short-term re-rating,” it said.

Tullow Oil was under pressure after drilling at its prospect offshore Sierra Leone indicated gas and light oil at the lower end of pre-drill expectations. Fears that the prospect may not be commercial overshadowed news that Tullow had completed a much-delayed deal to sell its Ugandan acreage for $2.9bn. Its shares fell 3.6 per cent to £15.43.

An upgrade to “outperform” from Credit Suisse lifted Admiral, the car insurer, by 3.2 per cent to £10.43.

“We expect full-year results on March 7 to represent the first step for Admiral towards regaining market confidence that bodily injury challenges are being resolved, with improved clarity expected to provide upside risk to earnings expectations,” said the broker. Admiral warned twice last year that unexpectedly high claims for serious injuries were eating into its surplus capital.

Broadcaster ITVadded 1.9 per cent to 79½p, a move some traders tried to attribute to bid theories.

Croda climbed 4.5 per cent to £21.23 on better than expected results and a positive outlook statement. The chemicals maker was a candidate for promotion into the FTSE 100 at next month’s index review along with Investec, off 0.8 per cent to 395¼p, and Aberdeen Asset Management, down 1.2 per cent to 257¼p.

Homeserve dropped a further 3.6 per cent to 226p in the wake of Monday’s warning from fellow assistance insurer CPP Group that penalties for misselling could put it out of business.

Jefferies set a 195p target on Homeserve shares. It argued that consensus growth expectations were “materially too high” given the disruption to its UK business from an investigation into possible misselling.

Chipmaker CSR slipped back by 5.1 per cent to 261p, with Canaccord Genuity and Numis Securities both downgrading in response to Monday’s results-inspired 21 per cent jump.

Among small caps, hologram printer API Group rose 15.3 per cent to 50¾p after Crystal Amber, the activist fund, declared a maiden 7 per cent stake.

The company said that it had preserved the well off the coast of Sierra Leone for possible re-entry, as it was likely to require “additional evaluation”. Shares in Tullow lost 3.6 per cent to £15.45.

“More work is required to better understand the commercial potential of these discoveries,” said Nick Copeman, analyst at Oriel Securities, who left an “add” recommendation on Tullow’s stock and called the overall results from the well “encouraging”.

The index fell 17 points overall to 5,928.2, a loss of 0.3 per cent coming after a 0.7 per cent rise in the previous session. Relief over international agreement on a second bail-out deal for Greece was tempered by growing fears that it could need a third.

A “strictly confidential” report on Greece’s debt projections prepared for eurozone finance ministers and seen by the Financial Times revealed the country’s financial restructuring is off course and more funds could be required in the future.

Michael Hewson, senior analyst at CMC Markets, said: “While the [existing] package may buy more time it remains highly debatable whether it will achieve the measures it is designed to, given the magnitude of the problems in the country.”

Jennifer McKeown, senior European economist at Capital Economics, suggested Brussels’ worst fears could yet materialise: “With the recession thwarting debt reduction efforts and public outrage growing, we still see Greece leaving the eurozone before the year is out.”

It all left traders across global markets in little mood to extend risk after their tentative move to six-month highs during the tortuous negotiations to secure the latest rescue deal.

Oil stocks slipped back, with Essar Energy down 1.7 per cent at 123p and BP down 0.3 per cent to 497.7p, coming off a year-high reached on Monday when hopes for a settlement with the US government over the Macondo oil spill energised the stock.

Support came from heavily-weighted mining stocks, helping hold the FTSE 100 around its recent peak. Vedanta Resources was the best single riser on the index, up 7 per cent at £14.54. The Indian miner outperformed its peers after it confirmed reports that it was planning to simplify its corporate structure.

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