FTSE on the slide

The London market closed lower today as investors feared US Federal Reserve plans to inject more cash into the economy may fall short of expectations.

The prospect of the central bank taking a cautious approach to a possible second bout of quantitative easing prompted traders to take money off the table and retreat to more defensive stocks.

Mining stocks were the worst hit and dragged the FTSE 100 Index 1% or 61.3 points lower to 5646. Kazakhmys led the fallers board, down 70p at 1321, while Vedanta was off 103p at 2066p and Xstrata shed 50.5p to 1264p.

The prospect of less ambitious quantitative easing saw the greenback rise in value - up against the pound at 1.58 and euro at 1.38.

The Footsie's oil giants were hit by the strength of the dollar as crude prices dipped to 81.80 US dollars a barrel. BP was off 7.3p to 419p, while Reading-based oil and gas explorer BG Group was down 12p at 1181p.

Three major retailers were hit by a note from Goldman Sachs downgrading their shares to neutral from buy. Debenhams dipped 2.4p to 75p, Morrisons lost 2.3p to 293.5 and Signet Jewellers dropped 33p to 2167p.

On the risers board in London, shares in British Airways were higher as the airline took a further step towards its merger with Iberia by publishing shareholder documents relating to the deal. The tie-up should be completed on January 21.

BA, which is due to publish half-year results on Friday, rose 1.9p to 278p.

The banking sector was spurred on by better-than-expected results from Germany's Deutsche Bank. Barclays topped the risers board, adding 5p to 282.3p, with Lloyds Banking Group not far behind after it advanced 1.1p to 69.1p.

Defensive stocks such as United Utilities and Severn Trent moved to the top of the leaders board as investors sought lower-risk opportunities. Their shares rose 1p to 599.5p and 5p to 1364p respectively.

In corporate news, British American Tobacco reported a 3% drop in underlying sales volumes in the nine months to September 30.

The world's second largest tobacco group sold 526 billion cigarettes and said it expected volumes to be soft in the months ahead. The update saw shares lose 37p to 2401p.

Outside the top flight, shares in flooring firm Carpetright were down more than 7% after a deterioration in UK like-for-like sales prompted analysts to lower their forecasts for full-year profits. The stock dropped 53p to 677p.

Elsewhere on the FTSE 250, bike and car chain Halfords jumped more than 4% or 16.2p to 425.8p after brokers at Morgan Stanley advised buying into the recent weakness in shares.

The biggest Footsie risers were Barclays up 5p at 282.3p, Lloyds ahead 1.1p at 69.1p, Schroders up 18p at 1525p and Amec ahead 8p at 1061p.

The biggest Footsie fallers were Kazakhmys down 70p at 1321p, Vedanta Resources off 103p at 2066p, Xstrata down 50.5p at 1264p and Invensys off 11.3p at 299.6p.