Closing Market: Shares recoup some losses but end weaker

Leading shares in the UK remained lower at closing but off day lows, with US shares also down following the release of poor corporate and economic news.

Having been weaker all day, the FTSE 100 ended the session 2.5% or 105.09 points lower, at 4,190.11, while the FTSE 250 was down 2.4% or 151.15 points, at 6,272.61, with US markets ending a four day rally on the S&P 500 and three days of gains seen on the Dow Jones Industrial Average.

As London shut, US shares remained in the doldrums, with the S&P down 1.6% lower and the Dow 1% weaker.

The top faller among the UK blue chips was private equity firm 3i Group, down 16.4% on fears the group may need to undertake a rights issue.

Other financials also retreated after making gains in the last few days, with Lloyds Banking Group the worst affected, down 11.8%.

It was joined by fellow banks Barclays and HSBC, down 6.3% and 5.2% respectively. Following an update in which it failed to clarify its capital position, insurer Legal & General was also one of the top fallers.

The firm was down 9.8% at the end of the session, with fellow insurer Old Mutual down 11.1%.

Risers were scarce, but Xstrata reversed the early losses seen after it announced a rights issue.

The company said it would pay its biggest shareholder $2 billion for a Colombian coal operation which is a key component of the rights issue. As well as this, a leading shareholder is also said to have taken up its full rights already, providing a further boost.

In reaction, shares bounced back to end the session up 3.6%.

Elsewhere, sterling continued to recover from lows against the dollar, up from a low of $1.4071 during trading to close at $1.4225.