Well-received results for Sainsbury and Scottish & Southern Energy got shares off to a good start, but dire unemployment figures and warnings from the Bank of England of a "difficult" period ahead weighed heavy on sentiment.

By the close the Footsie had shed 64.67 points to 4182.02, as the US's Dow Jones took an early pummelling.

This came after after US Treasury Secretary Henry Paulson said the government will not buy banks' toxic mortgage assets under its 700 billion dollar (£467bn) bail-out plans.

In London the Footsie's late fall took the gloss off strong results in the top flight.

Sainsbury's rose 71/2p to finish the day at 2793/4p after its half-year profits came in at the top end of forecasts and it said there was no change to full-year guidance for sales growth of between three and four per cent.

Analysts described the update as solid and said it was encouraging that the firm had so far defied the economic slowdown.

Southern Electric owner Scottish & Southern Energy fared even better, adding 55p to 1199p after it said it still expected a modest increase in full-year profits. This was despite higher wholesale gas costs contributing to a 54 per cent drop in half-year figures.

The top spot was taken by Vodafone as shares continued their post-results bounce, up six per cent or 7p at 122p. New chief executive Vittorio Colao pledged to focus the mobile phone giant on cash generation and controlling costs on Tuesday.

The prospect of more rate cuts to come helped other sectors such as property. Hammerson rose 4p to 631p and Liberty International added 22p to 5991/2p, a gain of almost four per cent.

Meanwhile on the fallers board, Man Group remained under pressure after last week's warning that the global financial turmoil had knocked nearly a quarter off interim profits and left assets under management lower than forecast.

Citigroup added to the woe by cutting its price target on the stock, leaving Man shares down 23 per cent or 58p to 190p.

Outside the top flight, Moss Bros jumped 70 per cent or 103/4p to 261/2p after it emerged entrepreneur Sir Philip Green had acquired a 28 per cent stake in the menswear retailer and remained interested in a full-blown takeover offer.

The other big small-cap gain came from television production firm RDF Media after independent directors said they had received a bid from a consortium featuring Big Brother creator John de Mol.

Shares soared on news of the possible 120p a share offer, with the stock up 44 per cent or 291/2p to 99p.

The biggest Footsie were Vodafone up 7p at 122p, SSE ahead 55p at 1199p, Thomson Reuters up 49p at 1125p and Liberty International which ended the day 22p higher at 5991/2p.

Biggest fallers were Man Group off 58p at 190p, Prudential down 393/4p at 276p, Kazakhmys off 301/2p at 2741/2p and Thomas Cook, which finished the session 167/8p worse off at 1521/4p.