US mortgage concerns hit FTSE 100

US mortgage concerns hit FTSE 100

The continuing crisis in the US mortgage market created more shockwaves in London as bank stocks dragged the FTSE 100 Index down more than 1%.

Barclays slumped to a 10-year low, while Royal Bank of Scotland and Halifax Bank of Scotland were both down by more than 8% as analysts fretted over the sector's possible need for additional capital.

The Footsie slumped 60 points to 5111.9 to test new three-year lows, and continue what has been a miserable week's trading so far. London's blue chip index had started the day in positive territory after Tuesday's 2% tumble, but slumped as low as 5073 over the US mortgage worries before recovering.

Fears over the exposure of RBS's Citizens business to the faltering American mortgage market saw its shares tumble 13.7p to 153.6p.

HBOS dropped 26.5p to 233.5p, taking the mortgage giant further away from its 275p rights issue price. With Friday's deadline for the bank's £4 billion cash call looming, underwriters look likely to pick up the tab for the fundraising.

Barclays shares were 18.25p down to 243.5p and left the bank at a level last seen in the autumn of 1998. On top of concerns about their capital positions, banks were hit by a critical report on the current account market from the Office of Fair Trading.

The banking stocks were pipped to the top of the fallers board by US-facing building supplies firm Wolseley, which told shareholders it would not pay a full-year dividend in September. Battered by a rapid downturn in UK trading conditions as well as its US woes, Wolseley shares slipped 32.75p to 257.5p.

Also on the back foot were heavily-weighted mining stocks as commodity prices fell. Rio Tinto and Xstrata were among the fallers, down 182p to 5038p and 152p to 3568p respectively. On the gainers side, ITV shares nudged up 0.7p to 41.2p amid continued bid talk involving German giant Bertelsmann.

In the FTSE 250 Index, JD Wetherspoon shares rose 6% or 11p to 185.75p after reporting better-than-expected sales figures. The business, which has around 700 pubs and 20,000 staff, reported a 0.4% increase in like-for-like sales for the 11 weeks to July 13. This compares to a 0.1% decline during the quarter to April 27.

Trinity Mirror was forced to issue a statement reassuring investors over its trading and financial position. Shares briefly touched positive territory as a result, but were later off 5p at 49.75p. Also down was price comparison website moneysupermarket.com, which fell 3.5p to 56.25p.