Shares on both side of the Atlantic plunged today after the Bank of England admitted that a recovery in the UK economy would take longer than expected while US retail sales fell for the second month in a row.

After an uncertain start to trading, the FTSE 100 index of leading UK stocks fell by 94.17 to 4,331.37 at close after the market digested the full implications of the Bank of England's quarterly Inflation Report.

While hinting that the worst of the recession was now over, the Report admitted the slump in GDP would be 4.5 per cent this year, worst than the 3.4 per cent it forecast in its last publication and well below the 3.5 per cent that Alistair Darling outlined in the Budget.

The Bank also said that while there would be recovery next year, the process would be “slow”.

In America, a slump in US retail sales sent the Dow Jones industrial average tumbling by 184.22 points to 8,284.89.

Sales at American stores fell for the second straight month in April as some of the country's best-known retail brands announced worse-than-expected first quarter losses.

The depressing sales figures are a forewarning for tomorrow's big day of retail results when Wal-Mart, Kohl's, Prestige Brands and Nordstom are due to release their earnings for the first three months of the year.

The US Commerce Department said that total retail sales were down 0.4 per cent in April, following a 1.3 per cent drop in March.

In London, Land Securities shares remained down at 13.17 per cent at 468p, after admitting the value of its properties fell £4.7 billion over the financial year.

However, it was replaced as the biggest faller in the FTSE 100 by Eurasian Natural Resources Corporation which revealed a fall in first quarter output, sending its shares down 11.94 per cent to 564p.

Compass Group maintained its early morning lead, up 6.01 per cent to 353p by early afternoon trading. The world's biggest caterer reported a 37.7 per cent rise in first half profits as it continued to win new business despite the recession.

Explore Markets

• United States

• Europe

• Japan

• China

• Russia

• The Gulf

• India

• Africa

Times Recommends

• BP may have a fight to keep $7bn deal on tap
• Banking giant Sir Brian Pitman dies at 78
• Swiss theft puts HSBC in spotlight over tax evasion