Fears that large-scale redundancies in the City will result in massed ranks of empty office blocks undermined British Land, the biggest landlord in the Square Mile. The owner of the Broadgate development at Liverpool Street station fell 22p to 819p, far more than its rival Hammerson, down 13p to 995p, which started the subsidence.

John Richards, Hammerson’s chief executive, said that the UK commercial property market remained tough and that rents in the Square Mile had softened in the past few weeks as banks began cutting staff. “We’re still expecting another 10 per cent decline in net asset values,” he said.

Deutsche Bank cut its price target for all big UK developers because of fears over falling rents, but said that falls in British Land and Hammerson were overdone. It cut Land Securities, down 23p to £15.17, from “buy” to “hold”.

The biggest property casualty was Capital & Regional Properties, down 56½p to 376¾p, as JPMorgan said that it was close to breaching covenants on its Mall fund. After the close it admitted as much and said that it may have to sell assets. That could mean a fire sale.

One of its tenants, the B&Q owner Kingfisher, down 1.8p to 131p, should also sell assets, Goldman Sachs said, cutting its price target to 110p. Lucy Chamberlain, retail analyst, said that Kingfisher’s premium to other retailers was unwarranted because British DIY spending is unlikely to recover “as evidenced by comments from Home Retail Group that trading at Homebase has begun the year weaker than expected”, while the French were about to follow the British lead and curb spending at Kingfisher’s Brico and Castorama stores. She added: “Kingfisher’s decision to avoid any significant disposals concerns us, given the highly leveraged balance sheet.”

Home Retail Group, fell 7¼p to 256¾p, losing some of Wednesday’s rally as fears over Homebase outweighed its good Argos figures.

The property gloom was countered by rising mining stocks and better than expected corporate earnings from Thomson Reuters and Rexam, which left the FTSE 100 unchanged at the close at 6,087.3. It has flat-lined on low volume for the past five trading days. Friday’s close was 6,091.37.

BT lost 1¼p to 221½p after Goldman Sachs said that a tough task awaits whoever replaces Ben Verwaayen at the top. It trimmed its earnings forecasts, saying that competition from mobile broadband was stepping up and there was a risk that it would end its buyback programme early to save cash for rolling out fibre networks.

British Airways was the top blue-chip gainer, up 16½p to 243p after it said that it may link with American Airlines and Continental. Some traders wondered whether this means it is in worse straits than feared.

CSR was the worst performing mid-cap, down 71p to a three-year low of 324p after it gave warning of slowing demand for Bluetooth headsets and wrote off a failed acquisition. Rank jumped 5¾p to 94¾p as traders reacted to talk that Gerry Sutcliffe, the gaming minister, would allow more jackpot machines in bingo halls.

— New York: Stocks surged as investors found solace in the rising dollar and falling oil prices, while anticipating another dismal jobs report today. The Dow Jones industrial average closed up 189.90 points at 13,010.00.

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