THE FTSE 100 index slipped back yesterday despite cheer over upbeat UK economic data as investors worried about the slowdown in emerging markets.

The top-flight slipped 15.4 points to 6604.2 in spite of impressive data from Britain’s retail sector, housing market and manufacturers.

It added to Monday’s 28- point slide while European markets also fell back and in New York the Dow Jones Industrial Average was down in early trading.

Industry figures showed the summer heatwave helped UK retailers enjoy their fastest July growth since 2006, with a 2.2 per cent increase in like-for-like sales, according to the British Retail Consortium .

Official data also showed Britain’s factories sprung into life in June, with manufacturing output rising 1.9 per cent from May to smash City expectations, while the latest house price figures from lender Halifax showed a 4.6 per cent annual rise in July – the strongest uplift since August 2010.

But markets were under pressure after the Reserve Bank of Australia slashed interest rates overnight to a record low of 2.5 per cent, as the country’s decadelong mining and construction boom stumbles over slowing growth in China’s economy.

Traders were turning their attention to today’s Bank of England quarterly inflation report when new governor Mark Carney is expected to reveal plans for “forward guidance” on monetary stimulus.

Economists warned it would be a delicate balancing act, as the Bank seeks to hold back market rate rises which would risk choking the recovery.

In corporate updates, Asia-focused Standard Chartered shares rose nearly three per cent despite a $1bn write-down of the value of its Korean business taking the bank’s first-half profits 16 per cent lower, as the group said it has good momentum for the rest of the year. The bank was 43.5p higher to 1567.5p.

Insurer Legal & General was also among the biggest top-tier gainers after reporting surging half-year profits. Shares in the group were up 4.5p to 201.9p.

Outside the top flight, baker Greggs suffered on the FTSE 250 Index after the recent summer heat wave left it nursing a £2m hit to profits. Its shares were down nearly nine per cent or 39.3p to 402.3p.