Hopes of a sustained rally in equity markets flagged yesterday as Wall Street shifted into reverse and Jean-Claude Trichet failed to give a firm signal on the direction of European interest rates.

The Dow Jones industrial average fell 52.59 points to 13,326.28 amid the release of data showing that sales of existing US homes fell in July for a fifth month in a row. The National Association of Realtors reported that sales had slipped by 0.2 per cent last month, while inventories rose 5.1 per cent to a 9.6month supply.

There was disappointment in Europe that Mr Trichet, the Governor of the European Central Bank, was not more definitive in his guidance on monetary policy after recent turmoil in financial markets. However, he did say that the ECB’s governing council was not “precommitted” to interest-rate changes before its September 6 meeting, a stance perceived as a softening of his comments on August 2 that were thought to tether the bank to a rate rise next month. In Germany the Dax dropped 21.28 points to 7,485.99.

Last week the FTSE 100 closed at 6,220.1, flat since the start of this year, but 6 per cent above the previous week’s low, when volatility in equity markets was exacerbated by investors’ use of “black box” computerised trading systems. Man Group, the hedge fund manager best known for delegating investment decisions to computers, has emerged as the heaviest faller in the FTSE 100 over the past six weeks’ sharp sell-off in equities. Its shares have fallen 23.8 per cent over that period, wiping nearly £3 billion from its stock market value.

The other biggest casualties of the index are drawn largely from the leisure sector, where the near-shut-down of the credit markets has dented hopes that the likes of Mitchells & Butlers and InterContinental Hotels might succumb to leveraged buyouts. Lonmin, the platinum producer, has fallen more than 20 per cent, having given warning last month that full-year sales would be below forecast because of production problems.

Only nine FTSE 100 stocks have emerged unscathed over the past six weeks, led by BAE Systems, which has risen 10.3 per cent in the wake of a strong set of first-half figures and a rebound from the announcement in late June that it faces a US Justice Department investigation into alleged corruption pertaining to its work in Saudi Arabia.

Persimmon, the housebuilder, was the FTSE 100’s next most resilent constituent, showing 4.6 per cent gain after last week’s well-received first-half results.

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