A surprise fall in US retail sales coupled with fresh bad news on America's jobs market has helped knock the FTSE 100 off its earlier highs in afternoon trade.
The index had climbed as high as 4789.98 - a rise of 73 points - thanks to stronger mining stocks, banks and hopes that the global economy was pulling out of recession earlier than expected.
But just 15 minutes after the US data, the UK bluechip index is up just 28.1 points, or 0.6%, at 4745.85.
US government figures show sales at US retailers unexpectedly fell 0.1% in July from increasing a revised 0.8% in June. Analysts polled by Reuters had forecast retail sales rising 0.7% in July, expecting a boost from the government's "cash for clunkers" program.
James Knightley, economist at ING Financial Markets comments:
"The July retail sales report is a major disappointment.""Cash for clunkers did boost auto sales by 2.8%MoM, but gasoline station sales fell 2.1%, building & garden equipment fell 2.1%, sorting goods dropped 1.9% and electrical appliance dropped 1.4%. Consequently the ex auto sales figure was down 0.6%."
"Admittedly we did see June revised up from 0.6% to 0.8% ... However, it isn't consistent with a particularly vigorous recovery and underlines why the Fed is retaining a somewhat cautious tone at the moment."
Separate data showed the number of American signing on for unemployment benefits rose unexpectedly last week.
