FTSE plunges 4.5%
The prospect of an economic recession left UK blue chips nursing hefty losses today as stock markets tumbled across the world.
The FTSE 100 Index plunged 4.5%, or 188.8 points to 4040.9, mirroring similar moves across Europe and the US.
France’s Cac 40 in France and Germany’s Dax both finished more than 5% down, while the Dow Jones Industrial Average on Wall Street plunged nearly 300 points in the first few hours of trading.
Fears of lower demand amid a recession sent commodity stocks sharply lower, with heavily weighted miners inflicting the most damage on the top flight index in London.
Banks and financial stocks were also hit in the sell-off, with Royal Bank of Scotland down 14%.
The first acknowledgement of a likely UK recession from Prime Minister Gordon Brown and last night from Bank of England Governor Mervyn King did nothing to aid sentiment, as the pound hit a five-year low against the dollar.
Kazakhmys was among the biggest Footsie fallers with a decline of more than 15%, or 47.25p to 257.75p. Oil and metals are bought and sold in dollars and the greenback’s strength caused prices to fall amid continuing fears of a global demand slump.
Vedanta Resources and Antofagasta – down 93.5p at 619.5p and 29p at 288.5p respectively – also featured prominently among the losers.
Many bank shares were on the back foot as Mr King also called the recent turmoil the biggest threat to the system in nearly a century.
RBS sagged 11p to 68.3p as analysts at Keefe, Bruyette & Woods slashed earnings forecasts. HBOS fell 7.8p to 74.6p and Barclays shed 18p to 224.5p.
Insurers were back in the red after yesterday’s brief respite.
The lift from Prudential’s reassurances ebbed away as the wider market dropped, leaving firms such as Aviva 37.5p lower at 266p.
Another blue-chip casualty was satellite broadcaster BSkyB after research said nearly a fifth of UK consumers planned to cut spending on television channels over the next year. Shares fell 11% or 45.5p to 356.5p.
Elsewhere, shares in home improvement firms were facing pressure after half-year results from Homebase and Argos owner Home Retail Group.
Home Retail Group slashed £542 million from the value of Homebase and warned of the impact of recent financial turmoil on profits, although shares recovered from a weak start to later stand 1% higher, or 2.75p to 196.75p.
B&Q owner Kingfisher fell 6.2p to 106.7p following the results, while Currys firm DSG International slid 9% or 2.25p to 23.5p. It is due to post a trading update tomorrow.
There were some bright spots from the market, with British Airways rising 4%, ahead 6.1p at 148p as vague market rumours suggested Cathay Pacific may be looking at bidding for the airline.
GlaxoSmithKline was also ahead after third quarter profits of £1.88 billion came in ahead of market expectations. Shares rose 15p to 1143p. Rival firm AstraZeneca rose 35p to 2330p.
Shares were firmer in the housebuilding sector after a further fall in interbank borrowing rates. Persimmon was up 3% or 6p to 242.25p.
The biggest Footsie risers were British Airways up 6.1p at 148p, Man group ahead 10.25p at 354p, Drax Group up 9.5p at 614.5p and AstraZeneca up 35p at 2330p.
The biggest Footsie fallers were Kazakhmys down 47.25p at 257.75p, Fresnillo off 23.4p at 136.6p, RBS down 11p at 68.3p and Vedanta down 93.5p at 619.5p.
