FTSE plunges to seven-year low
The FTSE 100 Index plunged to its lowest level since December 1995 today after the worst ever run in its history.
Continued uncertainty about Iraq and corporate profitability saw the Footsie close down 55.8 points at 3622.2.
The drop means the index has now fallen for nine days in a row, – the first time this has ever happened.
A host of heavyweight shares weighed on the market with banks, telecoms and oil stocks all heading lower.
Analysts said doubts over Iraq meant fund managers were holding back from pumping new money into market.
Martin Dobson, head trader at NatWest Stockbrokers, said he feared the Footsie could now drift to 3500.
He said: “There’s nothing to drive the market up, nothing apart from the speculation surrounding Safeway.
“Everyone’s waiting for a decision on Iraq, one way or t’other, and then we will have something to build on.
“But it’s six days until the next weapon inspectors report and at this point I can see us going below 3500.”
Mortgage bank Abbey National was one of the heaviest fallers after a downgrade from stockbroker UBS Warburg.
Shares in the group fell 5%, or 25.5p to 440p, but a host of other banks followed in its slipstream.
Royal Bank of Scotland dropped 22p to 1320p, Barclays fell 0.75p to 348.75p and Lloyds TSB was down 3.5p at 391.5p.
Insurers also shed earlier gains despite strong new business sales figures from Prudential.
Prudential was one of only 11 blue-chip stocks to escape the sell-off, rising 12.5p to 380p, or 3%.
But Friends Provident fell 2.75p to 94.5p, Old Mutual dropped 0.75p to 80.75p and Aviva eased 2.25p to 382.25p.
Telecoms were also down with Vodafone dropping 2p to 116p, mmO2 off 0.75p at 49.25p and BT down 8.5p at 180.5p.
And oil giants BP and Shell were also lower, with BP down 5.75p at 374p and Shell drifting 5.5p at 361p.
Analysts had hoped for a bright start to trading on Wall Street after a lacklustre morning in the City.
But the Dow Jones Industrial Average fell back after gaining 60 points early and was struggling to hold onto 8300.
In London, retailers had given a lift to the Footsie early on after staggering retail sales figures for December.
The Office for National Statistics showed volume sales were up 1.1% on November, far above City expectations.
But while Marks & Spencer hung on to close up 3.25p at 300p, electrical retailer Dixons fell 6.5p at 106.75p.
Among smaller stocks, supermarket chain Somerfield continued to gain after yesterday’s encouraging interim results.
The group built on yesterday’s 20% gain and closed up another 5.5p to 83.5p - its highest level since January 2.
But Manchester-based catalogue retailer N Brown dived almost 27%, off 34.5p to 95.5p, after warning that pre-tax profits for the year would fall 5% short of the previous year.
The biggest Footsie risers were Prudential, up 12.5p at 380p, Man, up 22p at 830p, Hilton, ahead 2p at 144.75p, and Xstrata, up 6.5p at 556p.
The heaviest fallers were Dixons, down 6.5p at 106.75p, Abbey National, down 25.5p at 440p, Alliance UniChem, off 24.25p at 421.75p, and Hays, off 4.25p at 79.75p.
