Overnight in the US, stocks were led lower by the financial sector as investors worried about the impact of a drop in home sales on consumer and mortgage lending. The Dow Jones Industrial Average fell 0.5 per cent to 10,519.58, while the Nasdaq Composite Index lost 0.2 per cent to 2,137.25. Disappointing figures on US home sales took the wind out of Wall Street's sails on Tuesday, despite a pair of meteoric rises in the pharmaceuticals sector.

Steel makers led European shares lower yesterday as evidence emerged of overcapacity in the sector, while firm oil prices kept the broader market in check. The FTSE Eurofirst 300 lost 0.5 per cent to 1,180.39 by midday, London's FTSE 100 moved 0.4 per cent lower to 5,280.1, Germany's Xetra Dax slipped 0.6 per cent to 4,888.39 and France's CAC-40 fell 0.4 per cent to 4,419.48.

In fact the mining sector pulled the main London index lower yesterday as investors were uninspired by record earnings results from BHP Billiton. Although the Anglo-Australian mining group made a record full-year profit, it had been largely expected. Instead investors were mildly disappointed by news that the outlook for Europe, US and Japan remained challenging.

Japanese stocks fell yesterday morning, hit by profit-taking. The Nikkei 225 slipped 0.25 per cent to 12,441.31. The broader-based Topix fell 0.35 per cent to 1267.59. Sectors that recently soared on better expectations of Japanese economy were hit particularly badly.

Financial News compiled by Valletta Fund Management Ltd (Tel. 2122 7311) and BOV Stockbrokers Ltd (Tel. 2122 7370) members of the BOV Group.