A build-up of bearish data fuelled fears of a US economic slowdown yesterday as consumer confidence slumped to a two-year low and house prices in big cities suffered their biggest drop in 16 years.

The growing evidence that the credit squeeze and housing meltdown are spreading to the rest of the domestic economy will increase pressure on the Federal Reserve to set aside concerns over rising inflation and cut interest rates today.

Blue chips such as Procter & Gamble and US Steel added to the gloom with results that disappointed investors and contributed to a 0.3 per cent fall in the S&P 500 in New York midday trading.