Wall Street opened down for a third successive day on continuing uncertainty about the speed of recovery in the world’s biggest economy.
The Dow Jones industrial average shed 15.72 points, or 0.17 per cent, to 9,294.88. The Nasdaq Composite Index dropped 6.82 points, or 0.35 percent, to 1,962.07.
Confidence was knocked by higher-than-expected private sector job losses for August, as well as continuing worries about whether US banks will be asked to pay back government bailout funds.
Wells Fargo, which fell nearly 5 per cent on Tuesday amid talk that it might have to issue shares to finance its repayment, lost another 9 cents to $26.12, despite saying that it could pay the money from internal funds.
In London, the FTSE 100 index remained in the red, down 28.124 points to 4,791.58 by mid-afternoon trading.
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The second day of sell-offs follows what has been described as the biggest six-month rally in world share prices for 50 years.
The FTSE 100 reached a ten-month high last week, rising to only 4 points below the 5,000-mark and helping the value of all British shares soar by £454 billion to £1.44 trillion since early March.
Investors are also concerned over a warning by UK insurers that they may need extra £50 billion in cash if new European rules on providing for annuities come into force.
At the same time, persistent rumours that RSA, the country’s biggest commercial insurer, is eyeing a share issue also destabilised investors.
“I think the sell-off will be light for now,” said Marc Kimsey, a senior trader at derivatives trader Accendo Markets. “There has been a natural reason for people to get the jitters at the moment with rumours about US banks and what we’ve been hearing about the insurance companies.
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“People are probably right to take a few quid off the table. These are only rumours so we won’t see massive falls for now.”
He added: “But if we do get confirmation of any of this then we will have to hold on to our hats”
Banks and financial stocks were the worst performers in early trading on London.
Legal & General, seen as the life insurer most exposed to annuities, lost 5.3p to 69.18p. It was also hit by the revelation today that Odey Asset Management, the hedge fund, had increased its short position to 0.31 per cent from below the disclosable 0.25 per cent figure.
Royal Bank of Scotland fell 2.3p to 53.2p, and Lloyds lost 6.02p to 99.64p, hit by fears that it was close to a rights issue to avoid the need to pay for the Goverment’s Asset Protection Scheme.
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Miners were also weak as figures from China showed that its iron ore imports in August had dropped to a nine-month low.
Antofagasta, the copper miner, lost 19.5p to 716p and Vedanta Resources was down 60p at £16.38.
BP led the risers after announcing a major oil find in the Gulf of Mexico, sending its shares up 17.45p to 536.95p.