Mining stock declines drag Footsie back into the mire

Investors were also wary of the latest US interest rate decision and the first State of the Union address by President Barack Obama.

The FTSE 100 Index slumped to its lowest level so far this year at one point before closing 59.38 points down at 5217.47.

Investor sentiment has been given a knock in recent weeks with persistent concerns over the impact of potential lending curbs in China.

America's Dow Jones Industrial Average was also on the back foot in early trading – down 0.3 per cent.

In currencies trading the pound was up against the dollar at 1.62 and also rose to 1.15 against

the euro.

The Federal Reserve's interest rate meeting occupied investors' minds, while President Barack Obama was also in the spotlight, particularly in the wake of last week's proposal to impose restrictions on Wall Street's more risky trading activities.

This shock announcement triggered the recent sell-off in world markets and left banking stocks sharply lower.

Fed officials are also likely to debate their exit strategy from an unprecedented dose of monetary stimulus employed to counter the worst financial crisis since the Great Depression.

Weak holiday-period retail sales and further setbacks in the battered US housing market have dampened talk of any immediate rush for the doors.

Instead, policy-makers will continue to debate the merit of various tools that might be used to drain credit from the banking system.

Barclays and Royal Bank of Scotland were back under pressure yesterday, declining 91/8p to 2667/8p and 13/4p to 33p respectively. Lloyds Banking Group lost 7/8p to 507/8p and HSBC fell 105/8p to 663p.

The mining sector littered the fallers' board in London amid concerns that China is looking to cool its economy.

Fresnillo led the declines – down 26p to 672p – followed by Anglo American, which fell 78p to stand at 2379p.

In corporate news, Morrisons shareholders failed to be stirred by the announcement that Dalton Philips, a former executive for US giant Wal-Mart, is to be the chain's new boss. Shares lost 17/8p to 2923/4p.

Man Group was the biggest loser – off 171/8p to 246p – as Credit Suisse cut its target price for the hedge fund group's stock.

Any cheer for investors came from outside the top flight after well-received trading updates from drinks firm Britvic and pubs group Greene King.

The latter rose 95/8p to 4425/8p after it reported a strong Christmas, although it added that sales had moderated since then due to January's big freeze.

Investec Securities upgraded its profit estimates by 4 per cent following the update.

Meanwhile, analysts said a return to growth in the water and sports drinks category represented a significant trend for Robinsons firm Britvic, which saw its shares top the FTSE 250 Index risers' board – up 7 per cent or 271/4p to 4313/4p – after an 11 per cent rise in first quarter sales.

WH Smith shares were also higher, up 83/8p to 4983/8p, after the retailer reported another steady trading performance.

The company said like-for-like sales were down 4 per cent, but this was offset by continued margin improvement in its high street and travel divisions.

The biggest Footsie risers were Resolution up 17/8p to 811/2p, SABMiller ahead 26p to 1693p, British American Tobacco up 25p to 2070p and ICAP up 41/4p to 3841/4p.

The biggest Footsie faller was Man Group.