FTSE:5,357.63 (+7.05) Mid-250:10,412.73 (–119.07) Small Cap:3,017.61 (–2.90)

THE LONDON market clawed back its earlier losses yesterday after better than expected data from the US calmed fears caused by disappointing German growth.

The FTSE 100 index had dropped by as much as 85 points in early trading after figures showed the German economy grew by just 0.1 per cent in the second quarter of 2011 – far below expectations of 0.5 per cent. However the blue chip index staged a recovery to close up 7.05 points at 5357.63 after traders’ nerves were soothed by encouraging US economic figures.

There was more good news for the world’s biggest economy after ratings agency Fitch reaffirmed its triple “A” rating, just days after a downgrade from Standard Poor’s sparked a bloodbath on world markets.

Yet despite the US data, fears remained about the strength of the global recovery. The slowdown in Germany was revealed a day after figures showed the French economy ground to a halt in the quarter and added to euro zone debt fears.

Michael Hewson, analyst at CMC Markets, said: “If peripheral countries like Spain and Italy were hoping that Germany was going to help save them from their debt nightmare with powerful growth, this morning’s GDP numbers put paid to that illusion.”

The latest downbeat news from the euro zone put further pressure on banking and mining stocks. However many shares in these sectors recovered much of their losses in late trading.

Miner Vedanta Resources was among the biggest losers, down 3 per cent, or 42p to 1383p, while copper miner Antofagasta was off 36p at 1228p. Barclays fell nearly 1 per cent, or 1.8p to 181.6p, while Royal Bank of Scotland eased 0.5p to 25.7p.

Water stocks also featured on the fallers board after broker Goldman Sachs downgraded the sector following a strong run for shares. They included Severn Trent, which dropped 33p to 1461p, while United Utilities fell 6.5p to 592.5p.

The biggest Footsie risers were Randgold Resources up 255p at 6435p, Fresnillo ahead 65p at 1861p, Icap up 14p at 444.5p, and Standard Life ahead 6.2p at 212.4p.

The biggest Footsie fallers were British Land down 20p at 544p, Hargreaves Lansdown off 14.1p at 458p, Vedanta Resources down 42p at 1383p, and Antofagasta off 36p at 1228p. – (PA)