Tesco was under pressure after Delhaize, the Belgian supermarket group, sent a ripple of fear through retail and supermarket stocks with a warning that consumers in the United States and Europe are trading down to cheaper goods.

Shares in Delhaize, tumbled as much as 18 percent to a five-year low, as analysts indicated that Wal-Mart was taking its share in the US.

Tesco, which is attempting to expand in the US through its Fresh & Easy brand, fell 3.6 per cent. It was also hurt by a downgrade yesterday from Sainsbury's broker Morgan Stanley, which said that the UK food market was not growing fast enough to justify the amount of money it was spending to capture market share. It has a 345p target price and an underweight recommendation.

Poor figures from Merrill Lynch and Microsoft after Wall Street closed hurt London stocks as did a big rack up in Britain's public debt figures.

The FTSE 100 was down 43.3 by 10.38am, also hit by a feeling that mining and oil stocks had peaked, even though the oil price edged back up after three days of heavy falls from its record high.

Platinum hit an 11-week low and the falling zinc price is forcing many zinc mines around the world to close down.

Eurasian Natural Resources, an iron ore and ferrochrome miner in Kazakhstan, was the worst off, down 7 per cent, and iron ore miner Ferrexpo was down 7 per cent as well.

Reckitt Benckiser fell 5 per cent to £23. 55. RBS cut its target price but moved from sell to hold.

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