FTSE loses ground again

A revival on the London market proved short-lived today as fresh credit concerns from the United States sent blue-chips tumbling.

The FTSE 100 Index regained more than 150 points in yesterday’s session, but steep falls in the US and Asia overnight hit home today, sending the benchmark index 129.3 points lower at 6230.8 by mid-morning.

Investors were shaken by news that a leading American mortgage company was facing insolvency – renewing fears about credit quality in the US mortgage market and putting paid to an earlier rally on Wall Street.

Only three leading London stocks were in positive territory as the panic spread.

Confectionery group Cadbury Schweppes topped the Footsie fallers with a drop of more than 7%, or 43.5p to 576.5p, after it reported a 6% fall in underlying operating profits.

Analysts were disappointed after the Dairy Milk firm warned that margin improvement would be unlikely this year.

The UK’s biggest lender, HBOS, also led banking stocks lower after it reported weaker-than-expected retail growth, despite posting overall pre-tax profits ahead of forecasts. Shares slid almost 5%, or 45.5p to 924p.

Elsewhere in the sector, Royal Bank of Scotland slipped 15p to 578p and Lloyds TSB fell 7.5p to 550.5p.

Heavily-weighted mining stocks also littered the fallers’ board with BHP Billiton off 75p at 1398p, Xstrata down 158p at 3040p. and Rio Tinto 154p lower at 3452p.

Flagship carrier British Airways fell almost 3% – down 10p to 387.5p – after it was fined a record £121.5m by the Office of Fair Trading for collusion over fuel surcharges on long-haul flights.

Drugs giant GlaxoSmithKline led the handful of Footsie risers – as investors continued to favour the stock after positive news from US regulators on its Avandia diabetes treatment this week.

Despite turning ex-dividend, the stock was ahead 11p at 1266p.