The FTSE 100 Index was dragged back from a new 10-month high today as a steep fall on Wall Street put an end to London’s winning streak.
US shares fell sharply after a weaker than expected report on consumer sentiment left investors worried that unwillingness to spend could curtail the country’s economic recovery.
The Footsie, which had risen to its highest level since last October earlier in the day, slumped into the red to close down 41.5 points at 4713.9.
The reversal of fortune came as US investors took fright at poor data, sending the Dow Jones Industrial Average down almost 2%.
James Hughes, Market Analyst at CMC Markets, said the Wall Street sell off had pulled down London sentiment, brining an end to the market’s four-week winning streak.
The fall came despite recent optimistic comments on the US economy from the Federal Reserve, as well as France and Germany’s exit from recession.
Miners were the chief victims of the change in sentiment, reversing gains to end the day in the red. Kazakhmys, which had been up 41.5p at earlier in the day, slumped to close 3p down at 897.5p.
The biggest gains of the session came from the property sector as reports suggested a consortium of Asian investors was planning a possible bid for British Land that could be worth as much as £10bn (€11.6bn) including debt.
British Land topped the Footsie risers board for a second successive session, with a 4% surge, up 19.4p to 512.5p.
Hammerson, which also benefited from an upgrade by broker Societe Generale yesterday, climbed 6.8p to 404.1p and Land Securities rallied 4.5p to 631p after analysts also speculated on a possible bid for the firm.
Balfour Beatty also saw a gain of 6.2p to 351.4p after a study by the Royal Institution of Chartered Surveyors (RICS) showed the decline in construction between April and June was at a slower rate than in the previous quarter.
And housebuilders made headway as figures revealed that the number of people who lost their homes fell during the second quarter to around 11,400 people, down 10% on the previous three months.
Brighter economic prospects and an upgrade from Royal Bank of Scotland for Taylor Wimpey spurred on the shares rally, with the stock up 2.7p to 42.99p, or 7%. Also in the FTSE 250, Barratt Developments gained 11.5p to 240.1p, Bellway was 24.5p stronger at 835.5p and Persimmon climbed 20.6p to 503.5p.
Back in the top flight, TUI Travel shed 6.2p to 240.4p as investors digested this week’s cautious comments from the company and its rival Thomas Cook on prospects for the winter season.
The biggest Footsie risers were British Land up 19.4p at 512.5p, British Airways up 4.7p at 175.6p, Tullow Oil up 26p at 1072p and London Stock Exchange up 17p at 768.5p.
The biggest Footsie fallers were Eurasian Natural Resources down 45p at 763.5p, Old Mutual down 3.4p at 90.45p, Xstrata off 25p at 785p and HSBC down 19p at 650p.