US consumer data worries keep London mired in red

The Footsie closed 36.98 points lower at 5315.09 – a drop of 0.7 per cent – with the Dow Jones Industrial Average falling more than 60 points in early trade after figures showing a sharp fall in February US consumer confidence.

It fell to the lowest in 10 months, as consumers' short-term outlook on jobs worsened, according to a report from an industry group.

The Conference Board said its index of consumer attitudes fell to 46.0 in February from a revised 56.5 in the prior month. February's reading is the lowest since April 2009.

The median of forecasts from analysts polled by Reuters was for a February reading of 55.0.

"This is just a flat-out bad report," said Tom Porcelli, senior economist at RBC Capital Markets in New York.

Markets across Europe also fell in response, with the Dax in Germany down 1.5 per cent and France's Cac 40 off 1.4 per cent.

The consumer news offset better figures from America's beleaguered housing market, while traders were also waiting nervously for Federal Reserve chairman Ben Bernanke's latest testimony before Congress about the health of the US economy.

The main corporate highlights, meanwhile, will not arrive until later this week when annual results from the likes of Lloyds Banking Group, Royal Bank of Scotland and British Gas owner Centrica are due.

The pound weakened during the session as traders reacted to a largely downbeat outlook from Bank of England Governor Mervyn King, fuelling speculation that more action on quantitative easing could be well on the way.

Sterling declined 0.3 per cent to 1.55 US dollars, but later managed to recover a little against the euro, to 1.14 euros.

The market uncertainty failed to dent progress by building supplies firm Wolseley, which stood 12 per cent higher after upgrading the

City's profit expectations.

Even though Wolseley said the improvement was based on cost efficiencies rather than better economic conditions, shares added 181p to 1630p.

Other risers included pharmaceuticals giant AstraZeneca after it said it would pay 505m to HM Revenues & Customs in order to resolve all claims relating to a tax issue that dates back 15 years.

The first instalment of 350m will be paid in March and will lead to a lower tax rate and better earnings per share guidance. Shares advanced 7p to stand at 2817p.

Banking stocks were in mixed form, with Barclays down 41/2p to 3113/4p and HSBC 13/4p higher at 7005/8p after strong gains earlier in the session.

RBS and Lloyds geared up for their results with advances of 1/4p to 36p and 1/8p to stand at 513/4p respectively.

Elsewhere, car dealership Pendragon dropped 1/2p to 243/4p, after it posted underlying pre-tax profits of 10.1m in the 12 months to December 31, compared with a loss of 33.6m in 2008.

It has been boosted by signs of recovery in the luxury end of the market, but warned that the volume segment could struggle until 2011.

Nightclub operator Luminar slipped 11/4p to 32p after the announcement that founder Stephen Thomas will step down from his role as chief executive at the end of this month and be replaced by former Zavvi boss Simon Douglas.

The biggest Footsie risers were Wolseley, Intertek ahead 70p to 1288p, Smith & Nephew up 91/2p to 6721/2p, and Serco ahead 7p to stand at 5271/2p.