Footsie deeper in the red as US home repossessions up

Trading was also lacklustre on America's Dow Jones Industrial Average as investors received mixed economic data.

The Footsie closed 15.42 points lower at 5540.14, with the Dow down by a similar amount.

News that United States lenders repossessed more homes in August than in any month since the sub-prime mortgage crisis hit Wall Street trading, overshadowing figures showing a fall in US jobless claims.

In the UK, a shock fall in retail sales weighed on stocks.

The 0.5 per cent decline for August sales offset initial encouragement seen after B&Q owner Kingfisher beat forecasts with a 23 per cent rise in half-year profits.

Chief executive Ian Cheshire said he expected the company's UK stores to face challenging conditions for some time.

He added: "Our continued profit growth will come from our well-established self-help initiatives, including sourcing more products through our global network and vigorously driving operating cost efficiencies."

The company plans to revamp 16 of its larger stores in the UK during the second half of the year and said another 30 showroom areas, featuring kitchens, bathrooms and bedrooms, will also see investment.

Kingfisher, which owns Screwfix, added that the roll-out of its TradePoint in-store merchanting initiative into bigger B&Q outlets had been completed on time.

Kingfisher clung to positive territory after initially rising by around three per cent, but the rest of the sector saw declines.

The top flight hit a four-month high at the start of the week, however it has been stuck in a narrow trading range since then as investors struggle to make up their minds on the next move for world markets.

Yesterday's downbeat retail sales also put pressure on sterling, with the pound down to $1.56 and 1.19 euros. Oil and commodity stocks did their best to keep the FTSE 100 on an even keel after BP rose 4.35p to 408.45p, Royal Dutch Shell lifted 211/2p to 1829p and Randgold Resources cheered 50p to 6295p.

Among retailers reeling from the Office for National Statistics retail data, Next shares, which rose seven per cent on Wednesday, slipped 6p to 2170p, while Marks & Spencer surrendered an early gain to fall 31/2p lower to 376.1p.

Kingfisher remained in positive territory, up 0.9p to 219.8p, after the company's half-year figures impressed investors, despite continued pressure on sales in the UK division. Homebase rival Home Retail Group was down 1.1p to 213.4p, while Kesa Electricals lifted 2.1p to 1371/2p in the FTSE 250 Index after reporting strong first quarter sales from its Comet business in the UK.

One of the biggest falls in the top flight came from BT Group after Morgan Stanley downgraded the stock on fears the pensions regulator may accelerate the proposed deficit reduction schedule. The stock fell three per cent or 4.4p to 140p.

Outside the top flight, attention was focused on the dairies sector after Robert Wiseman revealed a major profits squeeze as it

battles "intense" competition across the industry.

The Glasgow-based firm, which processes and delivers more than 30 per cent of the fresh milk consumed in Britain every day, warned its profits could be as much as 16m lower in the next financial year due to pressure on margins.

Shares slumped 30 per cent, or 1431/2p to 342p and caused rival Dairy Crest to fall by four per cent, or 141/2p to 361.3p.

The biggest Footsie risers of the day were Cable & Wireless ahead 3.35p to 77.55p, Eurasian Natural Resources up 32p to 898p, Aggreko ahead 22p to 1550p and Royal Dutch Shell up by 211/2p to 1829p.

The biggest Footsie fallers were ICAP down 17.1p to 437.6p and BAE Systems off 11p to 329.8p.