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FTSE 100 Index slipped 58.1 points to 6162.5 by the mid-session

Gloomy inflation data spooked traders as the London market fell 1%.

A jump in the official measure on the cost of living to 3% during April dampened hopes of an interest rate cut in June, pushing retailers onto the back foot.

A disappointing update from lender Alliance & Leicester also undermined banking stocks as the FTSE 100 Index slipped 58.1 points to 6162.5 by the mid-session.

The biggest monthly jump in the Consumer Prices Index for nearly six years wrong-footed economists and left a host of high street names littering the fallers' board as hopes of an end to the squeeze on consumers receded.

Clothing chain Next was 41p off at 1268p, or 3%, followed by B&Q owner Kingfisher, down 4.6p at 147.1p.

Argos owner Home Retail Group slipped 6.25p to 260.5p, while pubs group Enterprise Inns maintained its cautious outlook after an 11% fall in first-half profits, sending shares 13.25p lower to 474p.

Major banks, meanwhile were heavily in the red, with Alliance & Leicester the Footsie's worst casualty after its trading update.

Its shares lost more than 10%, or 53p to 457p, after it took a £192 million hit from investments linked to the credit crunch and said mortgage balances deteriorated in the first four months of the year.

Britain's biggest mortgage lender Halifax Bank of Scotland was also on the back foot, down more than 4%, or 23.25p to 482.25p.

HSBC shrugged off the gloom as it continued to benefit from its well-received update, up 10p to 892p. But other losers included Royal Bank of Scotland, off 7.75p to 337p and Lloyds TSB, down 13p to 411.75p, while in the FTSE 250 Bradford & Bingley shipped 8.75p to 106p, almost 8%.