FTSE in the red as poor US data sparks recovery fears

The part-nationalised bank's 3.6bn slide into the red sent shares up nine per cent at one stage, but the gains were cooled by a surprise rise in US initial benefit claims, sparking fresh jitters over the global recovery.

Demand for a wide range of US manufactured goods also unexpectedly fell in January.

The US Commerce Department said durable goods orders, excluding transportation, slipp-ed 0.6 per cent last month after increasing 2.0 per cent in December. That was below market expectations for a 1.0 per cent rise.

The number of people filing for first-time state unemployment insurance rose 22,000 to 496,000, the US Labour Department said. It was the second straight week claims rose and exceeded market expectations for 455,000.

Warnings from another ratings agency about Greece's dire financial position also weighed, leaving the FTSE 100 Index 64.70 points down at 5278.22, following Wall Street's Dow Jones Industrial Average lower.

The pound endured a torrid day on the currency markets, falling to a nine-month low below 1.52 against a strengthening dollar and below 1.13 against the euro.

The European Commission added to the Greek concerns after economic sentiment in the 16 countries using the euro fell in February for the first time in nearly a year.

In the UK, business investment meanwhile dropped 5.8 per cent in the fourth quarter.

RBS was the leading riser in London with a six per cent or 21/4p rise to 38.4p although the Government is still well over 10bn down on the 451/2bn it has pumped into the bank.

The RBS loss was less than the 5bn feared by analysts, while the City also noted an encouraging fourth quarter performance and signs the banking giant may be over the worst in terms of bad debt impairments.

Lloyds Banking Group will take its turn in the spotlight today, but in the meantime shares were up 1.4p to stand at 54.9p, following the RBS news.

The public purse is also nursing a loss of around 6bn on the

Government's 41 per cent stake.

The pair stood out on a shortened Footsie risers' board as the sell-off sent most other blue-chips into the red.

Centrica provided the other main interest of the session after its British Gas residential arm achieved higher than expected profits of 595m.

This fuelled anger among consumer groups but pleased investors as shares rose 5.6p to 277.7p.

In a busy session for corporate results, Mecca Bingo owner Rank rose four per cent, or 3.9p to 98.1p, after it reintroduced dividend payments and reported a solid start to trading in 2010.

Shareholders of homewares chain Dunelm were also celebrating after the company announced plans to return 43m of surplus cash.

Beneficiaries include chief executive Will Adderley, who owns 35 per cent of the business and stands to net around 15m from yesterday's payout.

The move came as Dunelm announced a 69 per cent rise in half-year profits and said it was confident of overcoming challenging trading conditions in 2010. Dunelm advanced 12.7p to stand at 387.7p.

The biggest Footsie risers of the session were RBS up 21/4p at 38.4p, TUI Travel ahead 7.1p at 267.8p, Lloyds up 1.4p at 54.9p and Inmarsat, which ended the day ahead 171/2p at 739p.

The biggest Footsie fallers were Xstrata down 50p at 1000p, Capita off 311/2p at 7121/2p, 3i Group down 10.6p at 258.7p and Wolseley, which slid 59p to stand at 1520p.