Britain's retail sector was on the slide after sales figures in the US showed a worse-than-expected slump in the run up to the crucial Christmas selling period and a profit warning from Travis Perkins, the builders' merchant and owner of Wickes.

DSG International, the Currys and PC World retailer, was the worst affected of UK retail stocks, down 14 per cent to a new low of 28.75p since it also faces competitive pressure from Carphone Warehouse's US partner Best Buy.

Best Buy is unlikely to bid for DSG until after what is likely to be a dreadful Christmas.

Travis Perkins slumped 30 per cent to 338.25p.

It dragged down Wolseley, the builders' merchant 13 per cent while Kingfisher, owner of B&Q, fell 7 per cent and Home Retail Group, owner of Homebase, lost 5 per cent. Galiform, the retailer of kitchens to builders, lost 13 per cent.

Carphone Warehouse lost 7 per cent to 129.75p.

The FTSE 100 was down 3 per cent, or 130 points, at 3949 by 10.30am, with miners continuing to slide after yesterday's ferocious falls but all sectors were down.

Tui Travel slumped 21 per cent after its German parent Tui said it was not intending to buy it out after all. This weighed on Thomas Cook, which fell 8 per cent to 174p.

John Wood Group fell another 10 per cent to 202p on fears that its plans to support oil sands extraction would not materialise, given the falling oil price.

Lonmin, the platinum miner, fell another 7 per cent after heavy losses yesterday as Goldman Sachs cut its recommendation on the stock from neutral to sell.

Lloyds TSB and Royal Bank of Scotland gained 4 per cent and 3 per cent on government suggestions that they would be allowed to pay a dividend after a year. Instead worries turned to Barclays, down 7 per cent to 222p, which appeared to be losing its advantage of being able to pay dividends earlier. It may also have to come back to the Government for a bailout if its share price continues to slide.

The insurance sector was also falling after relatively robust figures from Legal & General but a cautious statement about the state of the economy and following a downgrade by Goldman Sachs of the sector.

L&G lost 4 per cent but Friends Provident was down 8 per cent and Aviva, Prudential and Standard Life 7 per cent.

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