US stock markets slid in morning trading on surprise news that consumer confidence had fallen this month.

The Conference Board said that its index of consumer attitudes dropped to 49.3 in June, down from 54.8 in May, as Americans reacted to the tougher job market.

Economists had expected the index to make a small rise after two consecutive months of increases.

The unexpected fall shocked stock markets, sending the Dow Jones industrial average down 1.29 per cent or 109.89 points to 8,419.49 at 3pm in New York. The S&P 500 was down 1.19 per cent and the Nasdaq dropped 0.74 per cent.

Investors are now waiting for other key data due out later this week, including non-farm payrolls on Thursday. A rise in June’s unemployment rate will undermine hopes of that the economy is recovering.

Analysts expect the US unemployment rate to hit 9.7 per cent, edging closer to the 10 per cent that President Barack Obama warned it would reach in the next few months.

Sentiment received a small boost today when the S&P/Case-Shiller house price index fell by less than anticipated in April, the latest figures available.

House prices dropped by a seasonally adjusted 0.9 per cent, taking the year-on-year decline to -18.1 per cent. This was better than the -18.6 per cent economists had expected.

David Blitzer, chairman of the index committee at Standard & Poor’s, which runs the index of house prices in America’s 20 biggest cities, said: "The pace of decline in residential real estate slowed in April ... While one month’s data cannot determine if a turnaround has begun, it seems that some stabilisation may be appearing."

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