The verdict from the market was resounding - one interest rate cut will not be enough. Having risen by as much as 98 points in morning trading on the expectation of a rate cut, the FTSE 100 closed down 8.2 points at 6,485.6 after the prediction came true.

“This is just not enough to stop a consumer downturn,” one trader said. “I’ve been telling clients to sell banks and property stocks all afternoon.”

The interest rate worries were reflected by the fact that the top two fallers were Persimmon, the housebuilder, off 45½p to 750½p and Kingfisher, owner of B&Q, down 7.2p at 151.1p. Kingfisher was also hit by Lehmans cutting its price target to 180p on predictions of a further sales drop at B&Q and slowing expansion in China. Barratt Developments, a likely candidate for eviction from the FTSE 100 next week, lost 19½p to 448¼p.

Property developers also saw big early gains subside, although Hammerson closed up 18p at £10.56 sustained by a “buy” note from Mike Prew, of Lehman Brothers. He said that Reits, such as Hammerson and Land Securities, up 14p to £15.21, had been oversold, trading at 32 per cent discount to net asset value. The only block to a takeover, he said, is the uncertainty of the tax position, which the Government may clear up in the Budget in March.

Royal Bank of Scotland helped the bank sector with a write-off smaller than forecast and gained 13p to 478½p. HBOS rose by 13½p to 813p and Northern Rock rose 3p to 103p.

Friends Provident jumped 5.8p to 163.3p after hedge funds stopped short-selling as the period for pricing its convertible bond ended yesterday.

Rio Tinto lost 137p to £55.83 after China’s Baosteel denied that it had plans to counter BHP Billiton’s bid for the group.

Eaga, the installer of wall and loft insulation for utilities, was the top mid-cap performer, up 23p at 178½p on thin volume after falls. SIG, a maker of insulation and roofing products, gained 35½ to 862½p after UBS set an £11 price target, saying that its commercial construction customers should be relatively resilient next year. Johnston Press fell 10½p to a new low of 246p, although there is talk of analysts’ upgrades on signs of an advertising revival.

Aga Foodservice fell 3p to 366¾p after The Times reported that Cable & Wireless, down 2.9p at 187p, had shelved the sale of its pension scheme over high costs. Ed Truell’s Pension Corporation has built a stake in Aga in the hope of buying the pension scheme.

Abbot, which provides drilling and inspection services to the energy sector, edged down 4¾p to 346¼p after a 26¾p gain on Wednesday. It is thought final bids from two rival buy-out firms, First Reserve and Candover, are due early next week.

Hansen Transmissions, a Belgian manufacturer of wind turbine gear-boxes, rose 42p to 217p on its first day of trading, becoming the largest renewables stock on the market worth £1.14 billion.

New York: Wall Street rallied once again as investors bet that companies hurt by the American housing crisis will benefit from a government plan to help financially stretched home-owners and from another interest rate cut. The Dow Jones industrial average closed up 174.90 points at 13,619.90.

Explore Markets

• United States

• Europe

• Japan

• China

• Russia

• The Gulf

• India

• Africa

Times Recommends

• Lies and cover-up at MG Rover exposed by report
• High oil prices push manufacturing costs up
• Primark founder steps down as chief executive