A downbeat note from Goldman Sachs has undermined the property sector, adding to the market's general nervousness.
Goldman said: "We see an extended period of muted growth and rising borrowing costs given that current gearing levels appear demanding relative to pre-1990 levels and providers of finance are unlikely to regain their past appetite."
It added that the UK and Spain seemed to be the least attractive parts of the European real estate sector.
Goldman has removed British Land, down 39p to 969p, from its buy list and reduced its price target from £13.70 to £10.62. It has cut Hammerson, 33p lower at £10.52, from 990p to 870p and Land Securities, off 44p to £15.53, from £15.32 to £12.01.
Banks were also weaker after yesterday's Bradford & Bingley problems and news of huge losses at UBS. B&B ended 0.5p lower at 186.5p while suggestions that others were also in line for major write-offs left HBOS down 34p at 631p and Alliance & Leicester 15.5p lower at 543.5p.
A downbeat assessment of the US economy from the Federal Reserve chairman, Ben Bernanke, pushed Wall Street down about 100 points by the time London closed. So the FTSE 100 - which touched 5938.5 at one point - came off its best levels and ended down 0.8 points at 5879.3.
J Sainsbury ended 9.75p higher at 380p after a block of shares changed hands last night. One theory was that Robert Tchenguiz had exchanged his shares for CFDs while some speculated the Qataris were increasing their stake. Traders were inclined to give more credence to the former explanation.
