News that the American economy showed strong growth failed to lift Wall Street as markets around the world slumped.
The US Bureau of Economic Analysis said GDP grew at an annualised rate of 3.2% between October and December, which was up on the annual rate of 2.6% in the previous quarter.
But the Dow Jones Industrial Average was down 0.3% following the news and the FTSE 100 Index slumped 56 points or nearly 1% to 5909.5.
The American market was up nearly 2% in recent weeks and took a knock after the world’s biggest online retailer Amazon missed Wall Street revenue targets and Procter & Gamble and rival Colgate-Palmolive reported lower profits.
The Footsie was hit by a gloomy consumer confidence survey and bad news from Asian markets. A survey by GfK NOP revealed that consumer confidence showed its biggest drop in nearly 20 years between December and January as Britons faced up to the reality of higher VAT and public spending cuts.
In Japan, the Nikkei 225 closed more than 1% lower after Standard & Poor lowered the country’s long-term sovereign debt rating one notch to AA- due to its ballooning public debt.
Miners and oil firms topped the losers board with Essar Energy down 25p to 518p, or 5%, Carin Energy off 16p at 417.1p, or 4%, and Vedanta Resources down 88p to 2312p, or 4%.
Shares in TUI Travel dropped 3%, down 9.3p to 262.8p, after a downgrade by Deutsche Bank and as traders monitored the civil unrest in Egypt, one of the travel industry’s leading destinations.
Pubs and brewing group Marston’s saw its share price drop 1.4p to 102.4p after the company reported strong trading figures for Christmas and new year. The 11.2% rise in the 12-day period helped the Tavern Table owner to offset the impact of snow disruption at the start of December, while its operating margin was slightly better than a year earlier.
Fellow pub company and brewer Fuller, Smith & Turner was down 4.5p at 615p despite reporting that sales of its own-brewed beers including London Pride returned to growth. But it echoed the sentiments in the consumer confidence survey when it warned that customers’ spending power was likely to be squeezed by the Government’s austerity measures.