A sharp jump in inflation and more grim news on house sales and mortgage lending sent the FTSE 100 diving for cover today. Mortgage lenders took the biggest hit.

Sentiment was also depressed by fears that the housing news means no rapid drop in interest rates. A June cut was being priced in after rates were held this month at 5 per cent.

By 10.42am, the index was down 64 at 6156.7. Alliance & Leicester was the worst performer down 11 per cent at 452p as it took another mortgage related writedown.

HBOS, owner of the Halifax lost 5.5 per cent to 477.7p and in the mid caps, Bradford & Bingley was down 6 per cent at 163.25p.

Housebuilders were also again on the slide after Redrow warned of an even greater squeeze on house sales than it expected, as the lack of affordable mortgages hit home. It lost 5.5 per cent to 276.5p, dragging down the whole sector. Persimmon was off 3 per cent at 581p and Barratt Developments fell 5 per cent to 262.25p.

Tui Travel helped lift the travel sector with better than expected figures. It was up 2 per cent at 265p and Thomas Cook gained 0.6 per cent to 280.25p.

ITV was down 5 per cent at 63.7p hit by Goldman Sachs cutting its rating to sell saying that estimates for ITV remained too optimistic.

Goldmans also hurt J Sainsbury, down 3.6 per cent to 383.75p ahead of results tomorrow, by lowering its rating to neutral from buy.

In the mid caps, Eaga, the supplier of insulation and energy efficient boilers to council estates, lost 9 per cent to 104.25p. The group warned of delays to big contracts and rising raw material costs last month.

Explore Markets

• United States

• Europe

• Japan

• China

• Russia

• The Gulf

• India

• Africa

Times Recommends

• Brown targets fat cats after nationalising banks
• US shares soar on global banking rescue
• Europe follows Brown to head off meltdown