US economic gloom hits FTSE hopes

Uncertainty on the outlook for the US economy after disappointing retail sales and jobs data dented commodity prices yesterday, hitting miners and energy stocks and pushing Britain's top share index lower by the close.

The FTSE 100 ended 24.35 points, or 0.4 per cent, lower at 6,019.51. However, the blue-chip barometer is still up 2 per cent after the first three trading sessions of 2011 following a 6.7 per cent gain in December.

The Dow Jones Industrial Average on Wall Street also sank into negative territory in early trading amid cautious ahead of further US employment figures.

Will Hedden, sales trader at IG Index, said: "After a midday push near the 6,100 level, some of the bullishness has waned as the day has gone on. A cautious open on Wall Street has tempered enthusiasm in London, and a weak performance by the mining sector has pulled the index back."

Silver miner Fresnillo sank to the bottom of the Footsie, losing 89p to 1,578p, while Lonmin was not far behind, shedding 30p at 1,910p. Banks including Royal Bank of Scotland and Lloyds were also down, falling 0.4p to 40.4p and 1.2p to 67.2p respectively.

The pound dropped back after service sector activity for December revealed a slowing for the first time in 20 months, suggesting fourth-quarter GDP growth could be slightly below expectations. Sterling was down against the dollar at $1.54.

Advances from the likes of chip developer Arm failed to offset drops in the banking and mining sector, while fears for the retail sector were compounded after FTSE 250 firm Mothercare issued a surprise profits warning following pre-Christmas snow.

The stock slumped 5 per cent - down 33p to 565p - as it joined Next, HMV and Clinton Cards in highlighting the impact of December's snow.

Cambridge-based Arm was one of the day's biggest risers after computing giant Microsoft confirmed it would run the latest version of its flagship Windows software on the company's microchips.

The deal is a coup for Arm, analysts said, and will allow both companies to push into the high-end tablet market, which includes products such as Apple's iPad. The stock jumped to a ten-year-high earlier in the session before closing up 2 per cent or 10.6p to 482p.

Retailers Next and Tesco were shaken by low confidence in the sector, and fell 29p to 2,074p and 6.7p to 430p respectively.But high street giant Marks & Spencer was up 14p to 389p.

Rolls-Royce was another riser, up 5p to 659p, after it completed contracts for Trent 900 and Trent 1000 engines to power up to 61 new wide-body aircraft with British Airways.

The deal will appease investors shaken by safety fears about the Trent 900 after the explosion which forced Australian carrier Qantas to ground its fleet of A380 superjumbos.

BA also moved higher, up 12.6p to 300.2p, in spite of news that it expects the snow disruption to cost it around 50 million in the third quarter.

BP was in the spotlight, down 2.35p to 496.9p, after a damning report from a US presidential commission, which accused BP of taking "short cuts" which led to the Gulf of Mexico oil spill disaster.