BANKS, miners and oil companies plunged yesterday, creating a sea of red as panic spread across the world's financial markets.
London's benchmark FTSE 100 index closed down 7.8 per cent, or 391.1 points, at 4,589.2, its lowest closing mark sinc
e October 2004.
The fall is the largest points decline in the index's history and the third largest percentage fall, the largest since Black Monday in 1987. No blue-chip stock ended in positive territory.
Fallout from the struggling European banking sector meant shares opened lower, while heavy selling in New York saw markets plunge further in late afternoon trade.
Jimmy Yates, a dealer at CMC Markets, said the US Federal Reserve bail-out plan had failed to stimulate the credit markets, and fears over depositors was creating panic among bank investors.
"All told it's not looking pretty and it does seem as if we may now have to resign ourselves to seeing further casualties along the way," he said.
Banking shares again underpinned the wider falls, with Scotland's giants taking centre stage. Royal Bank of Scotland, seen as one of the most vulnerable of the European banking giants, closed down 20.5 per cent or 38.1p to 148.1p. In Edinburgh, persisting fears over its takeover saw HBOS shed 39.7p to 160.8p while Lloyds TSB slid 20p to 270.25p.
Insurers were also under pressure amid concerns about the impact of a falling stock market on the capital surpluses held by the sector. Aviva fell 61p to 417p, Prudential was off 69p to 429p and Standard Life slipped 18p to 232p, again below its 2006 flotation price.
Despite panic in the financial sector it was mining companies that dominated the top places on the fallers' board, a sell-off that began when analysts at Swiss bank UBS warned that earnings in the sector could fall by 46 per cent this year.
Kazakhmys toped the Footsie's fallers' board, off 27 per cent or 151.25p to 417.75p. Eurasian Natural Resources was close behind, down 130p to 425p.
Like commodities, oil prices tumbled, with crude oil in New York trading below $90 a barrel for the first time in eight months.
Giants BP and Shell lost 8.1 per cent and 7.7 per cent respectively. Among the hardest hit, however, were mid-sized exploration companies. Edinburgh-based Cairn Energy Cairn Energy lost 315p or 17 per cent to 1539p, with BG Group down 101p to 827p. Wood Group, the Aberdeen oil services company, continued its slide of recent weeks, closing down 9.1 per cent at 293p.
The level of gloom was also demonstrated by travel companies, which despite plunging oil prices, continued to dive.
British Airways started the day on the back foot after chief executive Willie Walsh reportedly said current conditions meant the airline's tie-up with Iberia could take longer than expected to conclude. BA shares closed off 20.4p at 145p.
The full article contains 510 words and appears in The Scotsman newspaper.
