London’s blue chip index fell for a second day running as investors took fright at slower than expected growth in China and rising inflation fears in the United States.
The FTSE 100 Index shed 26.3 points to 5410.3 as it continued to retreat from a two-month high of over 5500 earlier this week.
China’s economic growth in the latest quarter was a still-robust 9.1%, but this was down from 9.5% in the previous three months as the Chinese government tries to clamp down on escalating inflation.
France, meanwhile, added to the economic unease after ratings agency Moody’s said it may change its outlook on its debt rating to negative due to additional strains on Government finances.
The comments followed Germany’s warning on Monday that a comprehensive solution to eurozone debt crisis may not be near.
In another blow, UK inflation rose to a record high of 5.2% last month, hitting the Government with a hefty bill for increased state benefits and highlighting the tough conditions faced by households.
The pound fell against both the euro, to 1.142, and the US dollar to 1.564.
Miners led the decline in London, with Rio Tinto down 142.5p to 3159.5p, a fall of more than 4%, and Vedanta Resources off 42p at 1164p.
Out of the stocks on the risers board, security group G4S rebounded following its 22% hammering yesterday in the wake of its £5.2 billion deal to buy contract cleaner ISS. Shares were up 21.6p at 241.5p.
Engineers were strong led by Meggit, up 8.5p at 370.9p, Rolls-Royce up 11p at 700p and IMI up 17p at 801p.
In corporate results, leisure group Whitbread ticked higher after reporting a 15% rise in half-year underlying profits to £174.9 million.
The group benefited from a strong performance at coffee chain Costa and after an initial fall the shares rose 8p to 1635p even though the group said trading conditions remained variable.
Broadcaster ITV eased as it announced it is to take control of another slice of the channel 3 network following a deal to acquire Channel Television. ITV, which has not disclosed the purchase price, fell 0.45p to 61.95p.
On the FTSE 250 Index, housebuilder Bellway was a good performer as it posted a 51% jump in its full-year profits.
Bellway made £67.2 million for its latest 12 months, up from £44.4m a year earlier, and said reservations for the first nine weeks of the new financial period were almost 11% ahead of a year earlier. Shares rose by 21p to 698.5p.
The biggest Footsie risers were G4S up 21.6p at 241.5p, Tullow Oil ahead 35p at 1410p, GKN up 4.8p at 195.1p and Meggitt ahead 8.5p at 370.9p.
The biggest Footsie fallers were Rio Tinto down 142.5p at 3159.5p, Hargreaves Lansdown off 18.8p at 488.2p, Vedanta down 42p at 1164p and Land Securities off 19.5p at 686.5p.