Chinese economy worries push down FTSE index

Losses from Bank of America and lower than expected earnings results from Morgan Stanley did nothing to inspire dealers, while an unexpected fall in US home construction added to the sour mood.

The Footsie finished 92.34 points down at 5420.80 as fears that restrictions on China's bank lending could curb growth also punished oil and mining stocks.

Wall Street's Dow Jones Industrial Average also lost some ground in early trading – down almost two per cent– after earlier falls in Asian markets.

Meanwhile, minutes from the Bank of England's January meeting revealed worries that inflation could spike higher than previously thought because of the impact of freezing weather and January's rise in VAT.

There was more welcome news on the jobs front, however, with figures showing unemployment falling for the first time in almost two years and fewer people claiming jobseeker's allowance.

This sent the pound to a five-month high above 1.15 against the euro, with concerns over Eurozone countries Spain and Greece adding to the mix.

Sterling was largely unchanged against the dollar at 1.63.

It was a far slower session on the corporate front after Tuesday's recommended takeover of Dairy Milk firm Cadbury, which was 21/2p lower at 834p yesterday.

Until the late sell-off, many pharmaceuticals firms were among the day's risers after a shock win for the Republican party in the Senate vote for Massachusetts put proposed healthcare reforms in question. GlaxoSmithKline finished 1p down at 12831/2p while AstraZeneca was 14p off to 30531/2p.

Shire enjoyed better fortunes among the big drugs firms, up 32p to close at 1261p or three per cent, after an upgrade from analysts at

JP Morgan.

The fallers board was dominated by miners as the worries over a potential slowdown in China's demand for raw materials rippled through commodity stocks. The Footsie's biggest faller was Eurasian Natural Resources, which lost 641/2p to 9621/2p or six per cent.

Imperial Tobacco was one of the big fallers, after the cigarette maker turned ex-dividend, meaning shareholders do not get the latest payout. Shares were off 70p at 1995p.

In the FTSE 250, pubs group JD Wetherspoon was down 0.7p to 463p as the group said January's big freeze prevented drinkers from getting to its pubs and depressed like-for-like sales.

Comet owner Kesa Electricals was off 6.3p to 139.4p or four per cent, amid worries over lower UK sales.

Reaction from analysts to its trading report were mixed. Numis Securities experts said the group reported a "solid trading performance", but the sentiment was not echoed at Seymour Pierce stockbrokers.

Its analyst Kate Heseltine said "again the UK has disappointed", while Richard Hunter at Hargreaves Lansdown Stockbrokers added: "Today's announcement will do little to bolster prospects - with the likes of DSG having had a much stronger update, investors may be looking for better value elsewhere."

The leading second tier riser was financial spread betting firm IG Group, which gained 211/2p to 394p, or six per cent, as Singer raised its target price in the wake of the firm's upbeat trading statement released on Tuesday.

The biggest Footsie risers were Shire up 32p at 1261p, Cable & Wireless ahead 2.1p at 148.1p, Scottish & Southern Energy up 14p at 1198p and United Utilities ahead 5p at 5081/2p.

The biggest Footsie faller was ENR down 641/2p at 9621/2p.