Wall Street gloom hits FTSE recovery

London's leading shares lost hold of yesterday's modest gains as the market fell on the back of a gloomy session on Wall Street.

The FTSE 100 Index dropped 26.8 points to 4209.6 in early trading as a shock cut in production by oil cartel Opec sparked fears of soaring winter fuel costs and slower economic recovery, unnerving US traders.

Attention today is expected to focus on a stream of US economic data including weekly jobless claims, durable goods figures and new housing data for August.

On the corporate front in London, shares in banking group Lloyds TSB rose 1.75p to 420.75p despite news that it would face a £1.9m (€2.7m) fine and compensation of £98m (€141m) for the mis-selling of a high-risk bond.

The ruling by the Financial Services Authority, which was in line with expectations, relates to the sale of the Extra Income and Growth Plan, a product available through Scottish Widows.

The Opec production cut sent petroleum stocks up. BP topped the FTSE risers with a 4p boost to 426.75p while Shell was ahead 2.75p at 388.75p.

An upbeat trading update from Imperial Tobacco failed to prevent a 9p fall in its shares to 995p.

The Bristol-based cigarette group said a strong performance in the UK had helped lift the company's share of its home market to 44.1%.