FTSE down more than 1%

Downbeat housing market data from the US sent London stocks into reverse today in a nervous session for the FTSE 100 Index.

Downbeat housing market data from the US sent London stocks into reverse today in a nervous session for the FTSE 100 Index.

A surprise fall in US home sales during August overshadowed better than expected jobless claims to send Wall Street lower and trigger a sell-off in London.

The Footsie finished 60.1 points lower at 5079.3 - or 1.2% - as oil prices dropped sharply for the second successive day amid worries over subdued demand and a stronger dollar.

Markets were jittery following the US Federal Reserve's signal that it would slow its purchases of mortgage-backed securities - part of the support the central bank has given the US economy over the past year.

Meanwhile traders were also wary ahead of the Group of 20 meeting of the world's leading economies in Pittsburgh today and tomorrow, with possible financial regulations in the spotlight.

CMC Markets head of equities Jimmy Yates said: "All in all it has been a fairly negative day on both stock market movements and economic and corporate readings and with the G20 also set to stir things up we may have to brace ourselves for a volatile end to the week."

Among the fallers in London, British Airways ended its recent strong run after Citigroup withdrew its buy rating and fellow broker UBS said the company's earnings recovery would only show through late next year. BA shares fell 9.9p to 220p, a drop of more than 4%.

The only blue-chip stock which suffered worse punishment was building and plumbing firm Wolseley, down 62p to 1328p ahead of what are likely to be grim annual results on Monday.

London Stock Exchange was also down - off 27p to 852.5p - after it said the average daily value on its electronic trading systems declined by 43% in the five months to August. It is also cutting 12% of its workforce, equivalent to 133 posts.

Outside the top flight, Punch Taverns rose almost 2% after a leading investor said it would be in the best interests of investors if the company sold off all its pubs and called time on its business.

Andy Brough, fund manager at Schroders, told the Financial Times that the difference between the value of the company's assets and its share price meant it made sense to sell pubs, pay back debts and return what's left to shareholders. Shares rose 1.9p to 123.3p.

One of the major corporate stories of the session involved JJB Sports after it posted half-year losses of £43m (€47m), nearly treble a year earlier.

Shares were down 1p to 38.5p, even though JJB said trading was showing signs of improvement after the firm came close to collapse earlier this year.

The biggest Footsie risers were Autonomy up 47p to 1610p, Old Mutual up 2.55p at 100.2p, Carnival ahead 50p to 2182p and Intertek, up 26p to 1270p.

The biggest Footsie fallers were Wolseley down 62p at 1328p, BA off 9.9p at 220p, Rexam off 10.3p at 256.2p and Hammerson down 16.1p at 401.4p.

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