Footsie down 170 points

Shares in London took a hammering today with the biggest percentage fall since March 2003.

Shares in London took a hammering today with the biggest percentage fall since March 2003.

Investors saw 3% wiped off blue chip stocks in London as fears over rising inflation in the US returned to haunt Wall Street.

After a positive start in early trading, London felt downward pressure from New York where the Dow Jones Industrial Average plunged into the red after April inflation figures pointed to an acceleration.

In London minutes from a Bank of England meeting showing a member of the Monetary Policy Committee had become the first in a year to vote for a hike in interest rates, compounded the gloom.

Losing yesterday’s poise, traders in London resumed the sell-off with a vengeance today taking the FTSE 100 Index down another 170.7 points to 5675.5 by the close.

Meanwhile in New York the Dow Jones Industrial Average was off 175 points at 11245.8.

David Buik of Cantor Index said: “This looks like tin hat time – perhaps not Armageddon, but market conditions are looking decidedly uncomfortable having taken its lead from a panic-stricken ’street of dreams’.”

An earlier recovery in metal prices had taken mining stocks up the risers board, but the situation was reversed by the close of trading.

There were no blue chip risers, the top performer was SAB Miller which was unchanged at 1094p.

Xstrata tumbled more than 5% or 111p to 1990p, Rio Tinto felt the heat losing 151p to close at 2816p, while Anglo American dropped almost 6% or 127p to close at 2088p.

The slide dashed hopes of a boost for the sector following Xstrata’s offer for the 80% of nickel producer Falconbridge it does not already own.

By contrast Carnival’s 3% drop after yesterday’s lower earnings guidance seemed modest. Having earlier led the fallers, the sock was off 76p at 2250p by the close of trading on top of a 12% drop last night.

Also suffering heavily was supermarket chain Sainsbury’s after chief executive Justin King warned the road ahead remained challenging and that energy cots would increase significantly more than expected in the second half of this financial year.

Although the company turned its first-ever loss into profits of £104 million, shares were off almost 5% or 17p at 329.5p. Rival Tesco was also caught in the market bloodbath, losing 1.25p to close at 318.5p.

Clothing and homeware retailer Next also slid, off 5% or 96p to 1664p, after a trading update revealed it was still caught in the consumer spending slowdown with like-for-like sales down 5.8% on a year ago in the past 15 weeks.

Early gains for steel giant Corus were also wiped out despite news that Mittal Steel won the backing of financial regulators in Luxembourg, Belgium and France to launch its £12.67 billion offer for rival Arcelor, which has buoyed the sector.

The biggest fallers were Corus, down 26.5p at 378p, Anglo American down 127p at 2088p, Next off 96p at 1664p and Xstrata down 111p at 1990p.

There were no blue chip risers, the top performer was SAB Miller which was unchanged at 1094p.

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