Peter Ranscombe: US casts a long shadow over the City

Fresh concerns over the fragility of America's recovery weighed on stocks yesterday as the FTSE 100 Index suffered a second session in the red.

There was little cheer despite JP Morgan's second-quarter results beating market expectations, with investors focusing on disappointing industrial and manufacturing data in the US.

The Footsie closed 42.23 points down at 5,211.29, while the Dow Jones Industrial Average was more than 80 points lower in early trading.

Asian stocks also finished lower overnight as investors looked to take profits after a decent run for world markets in recent days. Hong Kong's Hang Seng and the Nikkei in Japan both lost more than 1 per cent.

Wobbles over the US economy helped the pound gain further strength against the US dollar. The US Federal Reserve issued a slightly weaker forecast for the world's biggest economy, which sparked speculation of more credit easing, helping sterling gain 0.8 per cent to $1.54. Michael Hewson, an analyst at CMC Markets, said: "A swathe of economic data out of the US punctured the possibility of a move into positive territory.

"As a result we have seen a swathe of profit taking as shares pull back from their recent peaks."

JP Morgan kicked off the US banking sector's reporting season with profits of $4.8 billion (3.1bn) after an improvement in bad debt, but this failed to halt hefty slides for bank shares on this side of the Atlantic.

Barclays was the session's worst-performing blue chip, down 13.2p at 300.4p, while Royal Bank of Scotland shed 1p to 45.2p. A disappointing session for miners saw many players in the sector on the back foot, with Eurasian Natural Resources off 30.5p to 842.5p and Rio Tinto down 104p to 3,030.5p.

In corporate news, shares in Mothercare were 4 per cent lower after it revealed a 4 per cent decline in first quarter like-for-like sales in the UK.

While the decline was offset by another period of strong international growth, shares in the FTSE 250 Index company still dropped 22p to 530p.

Fashion retailer SuperGroup moved in the opposite direction, jumping 15 per cent or 120p to 920p, after it more than trebled full-year pre-tax profits and said there was plenty of potential for international growth.

The Superdry brand owner - which listed in March - was only surpassed at the top of the second-tier risers board by IT firm Dimension Data, which soared 20 per cent or 20.2p to 121.8p after the company agreed a 2.1 billion takeover by Japanese giant NTT.

A major faller in the FTSE 250 was fund manager Gartmore, which slid 6 per cent or 6.1p to 104p after the resignation of Guillaume Rambourg, its star trader. Rambourg was suspended in March as the company launched an investigation over "breaches of internal procedures".

The firm said he had "decided to resign to devote his attention to concluding the FSA investigation into his conduct and to allow Gartmore to put these matters behind it".

Shares in Edinburgh-based oil and gas explorer Bowleven rose 8.6 per cent or 11.75p to 147.75p after the firm struck light oil off the coast of Cameroon.