London close: Footsie drops 1.5 per cent as nerves take over

- US manufacturing data disappoints- Markets nervous ahead of ECB meeting- Broker downgrades take down Vodafone, Land Secs...Disappointing manufacturing data from the US and skittishness ahead of a European Central Bank (ECB) monetary policy decision on Thursday sparked a sell-off on global stock markets on Tuesday."Today's market price action in Europe highlights perfectly the uncertainty gripping investors ahead of this week's key ECB rate meeting and press conference. Having seen fairly good gains yesterday in fairly light volume, these have been pretty much wiped out today as nervousness returns in the wake of continued bickering amongst policymakers in Europe," said market analyst Michael Hewson from CMC Markets this afternoon.ECB President Mario Draghi is widely expected to unveil plans on Thursday for buying sovereign debt in order to bring down bond yields in peripheral nations. Stocks fell early on as investors reacted to the news that credit ratings agency Moody's last night lowered its outlook for the European Union from 'stable' to 'negative' to reflect "the negative outlooks now assigned to the Aaa sovereign ratings of key contributors to the EU budget."Losses were extended after the ISM's US manufacturing purchasing managers' index (PMI) came in at 49.6 points in August, down from a reading of 49.8 in July. Consensus expectations were for a 50.0 level, indicating neither contraction or expansion.Meanwhile, domestic economic data came in mixed: the UK's services PMI rose from 51 to 53.7, above the 51.1 expected by analysts; however the construction PMI fell from 50.9 to 49 in the same month, below the 50 forecast.FTSE 100: Petrofac bucks the trend; ARM leads the declineJust a handful of stocks on the Footsie finished the day in the blue, one being oilfield service firm Petrofac after Credit Suisse upgraded its rating on the shares from 'neutral' to 'outperform'. "We believe the stock has performed poorly on a lack of project awards over the summer period and elevated expectations for the IES business. We believe the next few months will be better," the broker said.Chip designer ARM Holdings was the heaviest faller, extending its losses after after Deutsche Bank downgraded the stock from 'hold' to 'sell' yesterday, saying "Despite secular EPS growth drivers, we believe ARM's high valuation will come under pressure as falling smartphone chip prices impact royalty growth, Intel's odds to gradually gain market share in mobile are improving and the Windows-on-ARM ramp could be below expectations."Steel giant Evraz was among the worst performers of the day after Credit Suisse said that downward trend in iron ore and coal prices last week "goes in line with our view that risk for profitability of integrated producers and bulk miners [including Evraz] is on the downside." The broker maintained a 'neutral' stance on the stock today.Telecoms group Vodafone declined after being downgraded by Bernstein from 'outperform' to 'market perform' on the back of "an increasing number of negative risks". Real estate investment trust (REIT) Land Securities was a heavy faller after both JP Morgan Cazenove and UBS downgraded their ratings on the stock to 'neutral' this morning. UBS also cut its recommendation for REIT peers British Land and SEGRO today. Banking group Royal Bank of Scotland (RBS) was lower as the threat of a bruising legal battle with angry shareholders continues to hang over the company. Investec this morning lowered its recommendation on the shares from 'buy' to 'hold', saying that "after another modest rally, we throw in the towel". FTSE 250: Ashtead leads risers after upping guidance High-flying plant hire firm Ashtead jumped after raising profits guidance again as its new financial year got off to a strong start. "Given this early stage of the recovery, we see further outperformance from re-rating as well as scope for further positive earnings surprises," said analyst Andrew Nussey from Peel Hunt. Recycled packing company DS Smith was in demand after saying it was trading in line with market expectations and expected substantial year-on-year growth in earnings per share. FTSE 100 - RisersMorrison (Wm) Supermarkets (MRW) 279.10p +0.32%Diageo (DGE) 1,754.00p +0.17%Petrofac Ltd. (PFC) 1,518.00p +0.13%FTSE 100 - FallersARM Holdings (ARM) 528.00p -5.63%Evraz (EVR) 218.00p -3.92%Weir Group (WEIR) 1,580.00p -3.60%Admiral Group (ADM) 1,110.00p -3.48%Xstrata (XTA) 917.50p -3.14%Burberry Group (BRBY) 1,315.00p -2.95%Antofagasta (ANTO) 1,097.00p -2.75%British Land Co (BLND) 527.00p -2.68%Rio Tinto (RIO) 2,722.00p -2.63%Vodafone Group (VOD) 178.45p -2.59%FTSE 250 - RisersAshtead Group (AHT) 315.90p +11.82%Dixons Retail (DXNS) 18.83p +4.03%Smith (DS) (SMDS) 167.60p +3.46%Ophir Energy (OPHR) 601.50p +2.65%Brown (N.) Group (BWNG) 278.80p +2.46%SDL (SDL) 652.50p +2.19%Heritage Oil (HOIL) 194.00p +2.05%Britvic (BVIC) 328.60p +1.95%Menzies(John) (MNZS) 625.00p +1.87%Homeserve (HSV) 229.50p +1.86%FTSE 250 - FallersTalvivaara Mining Company (TALV) 130.70p -6.64%Ferrexpo (FXPO) 151.00p -5.45%Bumi (BUMI) 288.00p -5.01%Centamin (DI) (CEY) 79.25p -4.80%Gem Diamonds Ltd. (DI) (GEMD) 158.00p -4.30%Premier Farnell (PFL) 186.30p -3.47%New World Resources A Shares (NWR) 270.00p -3.23%Essar Energy (ESSR) 100.20p -3.19%Ruspetro (RPO) 122.00p -3.17%Hikma Pharmaceuticals (HIK) 712.00p -3.13%BC