SOME £31 billion was wiped off London's biggest companies yesterday as investors rushed for the exits on renewed fears of a lengthy global recession.
The FTSE 100 index sank 3.3 per cent to 3,875 – its lowest close since the depths of the fina
ncial crisis in mid-October – as markets plunged around the world.
The worries over demand in a stuttering global economy sent metal prices lower, while Brent crude sank below $50 a barrel to a three-and-a-half-year low at one point.
The slump came amid lowered projections for US economic activity next year from the Federal Reserve and worries over the fate of America's Big Three car-makers, which are pressing for emergency loans from Washington.
Anthony Grech, IG Index's market research analyst, said: "There is still a real sense of gloom about the financial markets based on rising unemployment and falling profits.
"Data from America is continuing to paint a perilous outlook for the US economy in the long term."
The fallers' board was topped by Aviva, which dropped 17 per cent or 59p to 292.75p. Other double-digit losses were nursed by Legal & General, which shed 9.4p to 60.3p and Prudential, off 48p to 246p.
Falling aluminium and copper prices meanwhile dented heavyweight miners, led by Eurasian Natural Resources – off 32.35p at 191.4p – and Vedanta Resources, which was 50.25p lighter at 387.75p.
With black gold at little more than a third of July's record $147 a barrel, BP shed 24p to 464p and Royal Dutch Shell lost 100p to 1,486p.
Among the risers, many banking stocks recovered ground after a difficult previous session. Royal Bank of Scotland gained 3.7p – or 8.8 per cent – to 46p on the day investors gave the green light to a £20 billion government-backed bail-out scheme by an overwhelming margin.
HBOS was the leading Footsie riser with a gain of 7.7p to 72p a day after investors in Lloyds TSB – up 6.8p to 125.3p – approved a rescue takeover of the bank.
Barclays, however, proved the exception, dropping 1.9p to 127.7p after analysts at Société Générale lowered their price target on the stock.
Marks & Spencer was a notable riser as the retail sector, recovered after falling heavily on Wednesday in the wake of more broker downgrades.
As M&S slashed prices in a one-day 20 per cent off sale, shares rose 3 per cent or 6.5p to 206.5p.
Sentiment was also helped by better-than-expected official retail sales figures showing a 0.1 per cent drop in sales volumes for October.
Fashion chain Next cheered 40p to 970p, B&Q owner Kingfisher rose 3.3p to 102.9p and Debenhams, which is also cutting prices this week, rose 1.5p to 25.25p – a gain of 6 per cent.
Car parts business Halfords gained 7 per cent or 17.25p to 240.5p after half-year profits came in ahead of forecasts.
The full article contains 524 words and appears in The Scotsman newspaper.
