London shares were in the red today as investors again bet the worst of the economic gloom is still to come.

Gains made from a slight rally yesterday could not be held, and in early trading the FTSE lost 50.5 points to 5321.3. On the face of it, this is far from traumatic but the reality is worse than appearances suggest.

Only the foreign mining stocks that increasingly dominate the London market - and reveal nothing about the health of UK plc - prevented a much more serious rout. Banks, homebuilders and consumer-facing businesses were all off today.

Eurasian Natural Resources, up 4%, Kazakhmys, 2% ahead, and Tullow Oil, gaining 3%, were the main risers, giving the FTSE a sense of balance.

The big fallers include the London Stock Exchange, Thomas Cook and British Airways.

The High Street banks - Lloyds TSB, Royal Bank of Scotland, Barclays and HBOS - were all on investors' sell lists once again.

With optimism in short supply, any sign of bad news quickly erodes conviction. Traders say that large investors are sitting on their hands at best, although some use rallies as a chance to sell more stock and shift into cash.

The FTSE is off 17% this year on fears about inflation and falling consumer spending. Of the stocks in the FTSE, more than 80 were down.

Banks have suffered from rising concern about their creditworthiness.

Financial stocks were down across Europe this morning, with France's BNP Paribas and Switzerland's UBS also on the slide.

Rik Zwaneveld, a trader at AFS Brokers, said: "Inflation fears are back on top of worries surrounding the fate of Freddie Mac and Fannie Mae, fears of additional writedowns etc. People are getting nervous again."

Richard Hunter of Hargreaves Lansdown said: "The retailers have taken an early hit and concerns still surround the banking sector. We could find ourselves treading water for a little while yet."