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London retailers are suffering from the financial turmoil as sales in the capital hit a three-year low.

The British Retail Consortium (BRC) said like-for-like sales in London fell by 0.04 per cent in September, the worst since summer 2005, as the gloom spread to the capital.

Sales had held up well in London this year, in contrast to falling numbers for the UK high street as a whole.

London is fairly unique in the amount of overseas visitors it receives, and the strength of the euro against the pound has been attracting shoppers from the continent in recent months.

But consumer confidence has taken a knock as the financial heart of the city has been thrown into turmoil.

Stephen Robertson, director general of the BRC, said: "This is the first negative sales figure for London retail sales since October 2005 when the effects of that year's terrorist attacks were still being felt.

"Customers in London were more resilient than elsewhere in the UK but turmoil in the City and the fastest rising unemployment in the UK have shaken confidence more than elsewhere."

Helen Dickinson, head of retail for KPMG, added: "With some tourists returning home and a bleak economic outlook, many retailers found the going tough."

The earlier Ramadan this year also meant the boost from Middle Eastern visitors this September was weaker than last September.

Designer fashions and accessories, popular with these visitors, suffered but continued to outperform middle market ranges, despite widespread discounts, the BRC said.

Food sales held up, while big-ticket items such as furniture and large electricals remained very tough, the group added.