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The FTSE 100 fell for the fifth day today amid another day of economic gloom.

After dropping over two per cent in morning trading, the index closed at 4,399.15 - a fall of 27.04 points or 0.61 per cent – with financial stocks taking the biggest hit.

Barclays was down 10.13 per cent, Friends Provident fell 8.88 per cent, Aviva dropped 8.15 per cent and Royal Bank of Scotland was down 7.09 per cent.

Real estate investment trust Hammerson was down 6.54 per cent

Meanwhile traders looked for defensive stocks to solidify recent gains.

Randgold Resources was up 6.37 per cent, Unilever rose 3.11 per cent, and Shire gained 2.27 per cent.

Reed Elsevier rose 2.67 per cent and FirstGroup rose 2.18 per cent.

Anthony Grech, market analyst at IG Index, said: "UK investors started the day with the usual raft of poor economic news.

"A British Chambers of Commerce survey highlighted increasing pessimism amongst businesses for the year ahead – and this was compounded by weak British Retail Consortium figures for December.

"While none of this can really be said to be an out-and-out surprise, it was a case of kicking the market when it was down."

He explained the FTSE 100 boost in the afternoon was due to a steady opening in the US.

At 12:36 EST (17:36 GMT) the Dow Jones was up 0.11 per cent to 8,483.21.

"With US markets now showing early signs of stabilising around levels that provided support in the middle of December, UK investors are hoping that much of the New Year weakness will be behind us for now," Mr Grech said.

"With the backdrop still negative, it is only the wildly optimistic that could come up with a case for an enormous amount of upside for stock markets over the weeks to come - but looking at current levels, some sort of short-term bounce by the FTSE back to the 4600 area does not look out of the question."