LONDON (Reuters) - The top share index ended 0.7 percent lower on Wednesday, down for its fifth straight session, as energy stocks fell on depressed oil prices, while financials took a further beating and weak data weighed.
The FTSE 100 .FTSE closed down 27.30 points at 4,006.83, after falling 2.4 percent on Tuesday.
The blue-chip index, which touched a session low of 3,938.92 before recovering slightly, is down 9.6 percent on the year after falling over 31 percent in 2008.
“There’s no doubt the economy is going from bad to worse, and it’s no surprise that banking and materials stocks are being hit hardest against a backdrop of this nervousness,” said Henk Potts, strategist at Barclays Stock Brokers, in London.
British factory orders fell more than expected this month and at their fastest rate since 1992, the Confederation of British Industry said.
British average weekly earnings grew by 2.2 percent in December 2008 compared with a year earlier, the weakest pace of growth since February 2003, the government said.
Similarly mining stocks were hit by the forlorn outlook for demand with Rio Tinto, Kazakhmys (KAZ.L), and BHP Billiton down 0.7 to 2.2 percent.
Minutes from the Bank of England’s February Monetary Policy Committee meeting revealed that policymakers voted unanimously this month to seek government consent for quantitative easing and voted 8-1 to cut interest rates to 1 percent, a record low.
This did little to settle anxious investors’ nerves and the pound fell to a two-week low against the dollar below $1.41.
Royal Bank of Scotland (RBS.L) tumbled 12.6 percent after the Daily Telegraph said the lender needs to find up to 8 billion pounds if it is to subscribe to a state-backed insurance scheme designed to cap any losses on toxic assets.
Shares in UK insurers were sharply lower again, led by Legal & General (LGEN.L) which fell 11.7 percent as it failed to reassure investors on Tuesday in an update on its capital position, despite quelling rumours of a rights issue.
The picture on the other side of the Atlantic was just as grim with U.S. stocks falling to three-month lows after data showed the housing market deteriorated further last month while industrial production shrank more than forecast in January.
“U.S. January industrial production and housing starts figures illustrated the depth and breadth of the fallout from the credit-fuelled boom of the past decade,” David Buik, senior partner at BGC Capital Partners said in a note. “Most worryingly, industrial production appears to be in free-fall.”
Shares in UK shopping mall owner Liberty International LII.L gained 5.6 percent, boosted by talk that it could sidestep a deeply-discounted rights issue by spinning off its non-retail arm and placing shares with key investors.
Defensive drugmakers were in demand, with GlaxoSmithKline (GSK.L) up 1.5 percent while Shire SHP.L gained 0.7 percent.
Editing by David Cowell