FTSE down almost 2%
The FTSE 100 Index slid almost 2% into the red today as the spectre of US interest rate hikes overshadowed trading.
The dollar gained strongly against the pound as markets reacted to news that the US Federal Reserve could soon undo some emergency support moves amid improving economic signs.
Mining and banking stocks felt the brunt of the sell-off as the Footsie finished 102.7 points down at 5217.6, with a surprise fall in UK sales volumes during November also hitting UK retail stocks.
Wall Street's Dow Jones Industrial Average was also on the back foot in early trading after a surprise rise in unemployment claims.
In London, the dollar's two-month high against sterling ensured a tricky session for the mining heavyweights, with Xstrata off 57p to 1030p and Antofagasta 38.5p lighter at 905p.
Meanwhile, an uncertain week for banking stocks continued as ailing US giant Citigroup sold shares for a price so low that the US Government delayed plans to sell down its stake.
Fears that the Bank of England could follow the Fed in ending its special support measures also hit sentiment. Lloyds Banking Group was worst hit, down 4.48p to 51.1p or 8%.
Retailers also struggled after official figures for November showed the first fall in sales since May, fuelling fears over Christmas trading.
B&Q owner Kingfisher declined 6.6p to 226.5p, Argos and Homebase firm Home Retail Group lost 12.3p to 283.7p, and Marks & Spencer was 2.9p cheaper at 399.1p.
In the FTSE 250 Index, Currys owner DSG International dropped 0.18p to 35.25p, a fall of 1%. Kesa Electricals, which owns rival Comet, also shed 5.5p to 149p despite positive broker comments after yesterday's results.
Among firms issuing end-of-year trading updates, property firm Savills added 4% after it said continued strength in the Asian property market and an increase in UK commercial transactions had given a bigger than expected boost to 2009 trading. Shares were 11.2p higher at 301.2p.
Construction and regeneration group Morgan Sindall was not far behind as it said it expected to meet its expectations for 2009, despite a smaller order book of £3.2bn (€3.6bn) at the end of the year. Shares were 16p higher at 616p.
Car dealership Inchcape also lifted 0.25p to 28.35p after forecasting results slightly ahead of expectations.
Builders' merchant Travis Perkins made similar comments but shares fell 19.5p to 795p as the company issued a cautious forecast on 2010 prospects.
All Bar One pubs group Mitchells & Butlers was 3.1p lower at 256.1p after the latest development in the boardroom battle at the business. Mitchells urged investors to support it against a rebel shareholder group at the firm's annual meeting next month.
The biggest Footsie risers were Rentokil Initial up 1.5p at 106.5p, Invensys up 2.1p at 283.4p, G4S up 1.8p at 259.6p and Cadbury up 3.5p at 792p.
The biggest Footsie fallers were Lloyds down 4.48p at 51.1p, Barclays down 18.15p at 273.85p, Xstrata off 57p at 1030p and Home Retail Group, which finished 12.3p lower at 283.7p.
