Reply #50: FTSE falls 1.7 pct as data, interbank rates weigh

[Ghost Dog]

http://investing.reuters.co.uk/news/articleinvesting.aspx?type=londonMktRpt&storyID=2007-09-05T160016Z_01_L05883682_RTRIDST_0_MARKETS-BRITAIN-STOCKS-UPDATE-2.XML

LONDON, Sept 5 (Reuters) - Britain's top share index fell 1.7 percent and broke a five-day winning streak as tightness in money markets underlined fears of a worsening credit squeeze and weak U.S. data raised concerns over the health of the economy.

The FTSE 100 .FTSE closed down 106.1 points, or 1.66 percent at 6,270.7, only the second down day since Aug. 17 when the U.S. Federal Reserve cut its discount rate to calm jumpy investors. European shares also finished lower on Wednesday.

Data showed an index of U.S. pending home sales hit its lowest level in six years in July and U.S. private employers likely added fewer jobs in August than analysts had expected.

They raised further concerns about the outlook of the U.S. economy against the backdrop of a crisis in the risky subprime mortgage sector.

"We are going to go through a long erratic period. There is absolutely no certainty that this crisis is anywhere near over," said Howard Wheeldon, senior strategist at BGC Partners.

"Until the markets have confidence that the credit markets can return to some form of normalcy, the amount of business that can be done is going to be extremely limited," he said, adding that a U.S. interest rate cut would alleviate the problem.

U.S. short-term interest rate futures rose strongly to suggest aggressive Fed action on rates this month after weak employment and housing data suggested economic growth could be slowing. Continued...

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