THE FTSE 100 Index lost 1.6 per cent, diving 104.1 points to 6483.3, with the sell-off reflecting disappointing corporate results, including from Asda owner WalMart, and fears that improved economic performance will accelerate the timetable for an end to US stimulus efforts.

In the US, speculation that the Federal Reserve will start to taper its quantitative easing programme next month increased after it emerged that the number of people seeking unemployment benefits dropped 15,000 last week to a seasonally-adjusted 320,000, the fewest since October 2007.

Yesterday’s eurozone growth figure of 0.3 per cent for the second quarter was followed by better-than-expected retail sales data in the UK today.

Sales volumes rose 1.1 per cent last month on a month earlier and were up three per cent on July 2012, the steepest rise for twoand- a-half years, as the heatwave sent sales soaring at supermarkets and department stores. But surging retail sales raised fears that a stronger UK economic recovery will result in the Bank of England lifting interest rates from their record 0.5 per cent low much earlier than expected.

Low-cost airline easy- Jet, fell 58p to 1252p, while housebuilder Persimmon was 87p lower at 1097p, a decline of 7.3 per cent.

Imperial Tobacco weathered another big decline in sales volumes by reiterating its guidance for the financial year. Volumes for the first nine months of the year were down seven per cent, rather than the six per cent forecast in the City, but chief executive Alison Cooper hailed the company’s focus on costs and strategy as she said full-year forecasts were unchanged.

The world’s fourth-largest tobacco group, with brands such as Lambert and Butler and JPS, rose by 2.6 per cent, or 55p to 2209p.