LONDON, England

WORLD markets slid yesterday after an unexpectedly big drop in US consumer confidence in February stoked renewed concerns about the pace of the US economic recovery.

In Europe, the FTSE 100 index of leading British shares closed down 36.98 points, or 0.7 per cent, at 5,315.09 while Germany’s DAX fell 84.37 points, or 1.5 per cent, to 5,604.07. The CAC-40 in France ended 49.64 points, or 1.3 per cent, lower at 3,707.06.

On Wall Street, the Dow Jones industrial average was 75.80 points, or 0.7 per cent, lower at 10,307.58 around midday New York time while the broader Standard & Poor’s 500 index fell 11.08 points, or 1 per cent, to 1,096.93.

US stocks had been trading higher in the first half hour of trading but the gains were more than erased by the news that US consumer confidence fell dramatically in February a day ahead of a key Congressional testimony from the Federal Reserve chairman Ben Bernanke.

The Conference Board said its main consumer confidence index fell almost 11 points to a ten-month low of 46 in February from 56.5 in January. The scale of the drop was unexpected — the consensus in the markets was for a far more modest decline to 55.

“The consumer confidence report was made-to-order for the market bears,” said Michael Woolfolk, an analyst at Bank of New York Mellon.

The health of the US consumer is considered to be key for the pace of the economic recovery around the world as US consumer spending accounts for around 70 per cent of the world’s largest economy.

Sentiment in the markets, particularly in Europe, had already been fairly brittle before the consumer data.

German shares especially were underperforming after a closely watched survey reinforced market fears that the recovery from recession in Europe’s biggest economy remains subdued.

The DAX had been trading modestly higher before the Ifo Institute reported that its business climate index for Germany fell to 95.2 in February — below its long-run average — from 95.8 the previous month.

The fall, which was the first in nearly a year, comes in the wake of similarly pessimistic reports from the likes of the ZEW institute and mounting evidence elsewhere that the recovery in the 16 country eurozone has been hit by the debt crisis.

And with figures for France also showing consumer spending down in January, analysts said there’s little chance that the pace of the eurozone recovery will pick up from the 0.1 per cent pace recorded in the last quarter of 2009.