Banking and property drag down FTSE

Banking and property stocks weighed heavy on the London market today as fears over the US high-risk mortgage market persisted.

The FTSE 100 Index failed to lift out of the red following yesterday’s plunge amid sub-prime home loan concerns in America, standing 20.8 points down at 6610.2 in mid-morning trading.

Property firms and banks were among the hardest hit, littering the Footsie fallers board.

Property group Hammerson was down 18p at 1372p and Segro, formerly known as Slough Estates, was also off 3p at 593p.

Banking giant HSBC, which has been one of the highest profile firms to suffer from the US sub-prime lending default crisis, saw shares dive 10p to 900.5p.

Mortgage giant HBOS was also under pressure, down 9.5p at 985p.

Oil major Royal Dutch Shell fell 30p to 2106p despite continued high oil prices, with Brent crude trading around 76 US dollars a barrel.

But advances by Whitbread and BSkyB helped the market recoup some gains seen earlier in the morning.

Costa Coffee parent Whitbread surged 6%, or 102p, to 1920p as reports revived takeover rumours, suggesting real estate company Starwood Capital may be a possible suitor.

BSkyB followed Whitbread in the risers ranking after the company reported that it had managed to improve its customer retention rates and added 90,000 net customers in its fourth quarter. The stock was ahead 36.5p at 708.5p.

Meanwhile Dove-to-Lipton Tea maker Unilever continued gains made in the previous session, fuelled by hopes of consolidation in the sector, with shares up 56p to 1703p. Peer Reckitt Benckiser also gained 2p to 2793p.

In the FTSE 250, Imperial Leather soap maker PZ Cussons fell 3% as investors fretted over reports that it may be feeling the heat from the weak dollar, which hit a new 26-year low against the pound today.

Sterling soared to more than 2.03 US dollars – the highest level since April 1981 – sending Cussons stock down 4.75p, to 160.25p.