UK economic data fears drag Footsie into the red

The FTSE 100 Index closed down 38.63 points at 5703.89 as traders awaited the Government's spending review, as well as the latest

interest rate minutes and borrowing and retail sales figures.

Mixed earnings figures on Wall Street added to the increasing pressure, with heavy early falls on the Dow Jones Industrial Average sending the Footsie deeper into negative territory.

Disappointing earnings reports from corporate heavyweights Apple and IBM offset better-than-expected results from US investment banking giant Goldman Sachs, leaving the Dow down more than 1 per cent at one stage of the session.

News of a shock decision by China to raise its key interest rate by 0.25 per cent – its first hike since 2007 – also weighed heavily on global markets as the tactic was seen as a move to slow down its economy.

This saw mining stocks plunge on London's Footsie, with Xstrata among the worst affected, down 4 per cent, or 57p to stand at 12481/2p.

The pound weakened against the dollar amid the anxiousness over this week's developments, as well as a CBI survey showing the worst reading for factory orders last month since April.

Sterling declined by 1 per cent to 1.57 US dollars.

Yesterday's defence budget blow from the Government hit defence-related stocks.

Babcock International dropped 5 per cent, or 281/2p to 564p, while BAE Systems fell 6p to 3637/8p.

Banks lost earlier gains, after credit rating agency Fitch said the banking sector was slowly returning to health in the UK, but warned that regulation of capital and liquidity requirements was likely to weigh on earnings in the long-term.

Lloyds Banking Group was the worst off, down 13/4p to 701/2p.

In corporate news, shares in Bellway were lower after it said it did not expect a pick-up in sales before next spring. Shares slipped 6 per cent, or 361/2p to 565p, even though Bellway posted full-year results slightly ahead of expectations and increased its dividend.

Whitbread, meanwhile, said it was well placed to accelerate growth plans for its budget hotel brand Premier Inn after posting a 28 per cent rise in group profits.

An advertising campaign fronted by Lenny Henry and a 29 a room offer helped lift like-for-like sales at the hotel chain in the first half of Whitbread's financial year by 10.1 per cent.

Shares were up 35p to 1728p

Elsewhere, Blacks Leisure jumped 25 per cent – up 81/2p to 421/2p – after it said it had received takeover approaches for some or all of the business.

Sports Direct, which pulled an offer for Blacks in March, fell 13/4p to 1471/2p even though the Serious Fraud Office said the company will not face charges in relation to its inquiry into allegations of cartel activity.

Shares in JJB Sports, which was also cleared, were up 1/4p to stand at 101/2p.

The SFO is investigating individuals in the case, while the Office of Fair Trading added that its own investigation into alleged anti-competitive conduct in the sports goods retail sector was still continuing.

The biggest Footsie risers of the session were Diageo up 28p to 1163p, Whitbread, Standard Chartered up 38p to 1959p and Autonomy ahead 25p to 1444p.

The biggest Footsie fallers were Fresnillo down 68p to 1223p, Xstrata and Man Group, which was down 101/8p to 2593/4p.