German short-selling ban leaves Footsie in the red

The German ban on short-selling of eurozone government debt and shares of major financial companies late on Tuesday sent indices worldwide deep into the red.

Hopes of a fight back on Wall Street soon faded as the Dow Jones Industrial Average plummeted another 1.5 per cent, which ensured the FTSE 100 closed steeply lower – down 149.26 points at 5158.08.

The surprise move from Germany – in the wake of a eurozone crisis triggered by the near-bankruptcy of Greece – sent the euro to new four-year lows against the dollar at one stage.

But market rumours that Europe's central bank was planning to step in and prop up the euro helped the single currency bounce back to 1.24 dollars.

Sterling also fell against a stronger euro, down to just over 1.16 euros, but gained ground on the greenback, at 1.44 dollars.

Oil prices, meanwhile, slumped to an eight-month low of 68 US dollars a barrel on investor concerns that efforts to contain Europe's debt crisis could fail and deep government spending cuts will hurt economic growth.

In the US, demand for loans to buy homes shriveled to a 13-year low last week, following the expiration of federal tax credits, while near-record low mortgage rates stoked refinancing, the Mortgage Bankers Association said.

Mortgage purchase applications sank 27.1 per cent to the lowest level since May 1997 in the absence of the popular government support, the group said. US housing groped for footing after more than a year of homebuyer tax credits worth up to $8,000 expired on April 30.

Requests for home purchase loans have fallen almost 20 per cent over the past month despite low borrowing costs.

There was only one gainer on the FTSE 100 as it made broad-based losses – defensive stock GlaxoSmithKline was the solitary riser, up 41/2p to 11771/2p.

Falls were led by several ex-dividend stocks and heavyweight mining stocks.

Xstrata was the biggest casualty with an 8 per cent, or 753/4p slide, to stand at 9333/4p.

Home Retail Group, which owns Argos and Homebase, was hit particularly hard as it also turned ex-dividend, meaning new investors will not share in the next shareholder payout. The retailer's shares slipped 201/4p to 2541/4p.

Scottish & Southern Energy was also caught up in the sell-off despite a "moderate" increase in profits and plans to hike dividends by at least 2 per cent above inflation for the next three years. The energy firm was off 28p to 1073p.

And British Airways continued to suffer despite services returning to normal after its strike threat woes and ash cloud disruption, with shares down 73/4p to 1923/4p.

Land Securities was likewise impacted by the wider sell-off with shares down 25p to 610p, in spite of annual results confirming a "dramatic turnaround" in the commercial property market.

All Bar One pubs group Mitchells & Butlers bucked the trend in the FTSE 250 after interim profits rose 55 per cent and amid signs of improved sales growth thanks to its strategy to focus on higher-margin food.

Shares in M&B rose 151/8p to 3181/2p, while Robinsons drinks giant Britvic was another to post share gains yesterday. The stock added 31/4p to 462p following Tuesday's interim results and news of a French acquisition.

The only Footsie gainer was GlaxoSmithKline. Two of the biggest Footsie fallers were Xstrata and Home Retail Group.