Leading shares in London have lost all of this week's gains as economic worries came to the fore once more, with an opening slide on Wall Street adding to the damage.
Investors have shrugged off news of better than expected UK retail sales to concentrate on the ratings downgrade of the UK outlook by rating agency Standard and Poor's.
The market had already been nervous following downbeat statements overnight from the US Federal Reserve, and this afternoon came more signs of weakness in the American economy. The number of people staying on benefits after the first week rose by 75,000 to a higher than forecast 6.66m, although new claims fell 12,000 last week in line with expectations. A survey of Philadelphia manufacturing also came in worse than anticipated.
So the FTSE 100 is now down 133.93 points at 4334.48, while Wall Street is down around 150 points.
UK-listed miners are still among the main fallers, on demand fears and after Credit Suisse downgraded the sector. Eurasian Natural Resources Corporation has lost 62.5p to 552.5p while Kazakhmys is 63.5p lower at 648p.
But pharmaceutical companies are wanted for their defensive qualities, with GlaxoSmithKline ahead 2p at £10.61. The company was helped by analysts at ING upgrading from sell to hold. ING said:
"We upgrade to hold after a 19% fall in Glaxo's share price since January. Emerging Market growth coupled with cost savings should support modest earnings per share growth post 2009, which we believe justifies the current earnings multiple."
Elsewhere bus and rail group Stagecoach has accelerated 3.25p to 132p as Bank of America Merrill Lynch upgraded from neutral to buy with a 190p price target.
