London’s leading share index tumbled to a fresh five-year low on Thursday as recession fears continued to shake volatile global markets.
The FTSE 100 Index shed more than five per cent - wiping a further £52 billion from blue-chip stocks - to finish down 218.2 at 3861.4, its lowest close since April 2003.
The sell-off combined with Wednesday’s seven per cent slide to erase Monday and Tuesday’s rallies and send the Footsie below its finishing mark last Friday - after its worst week since the crash of 1987.
CMC Markets dealer James Hughes said: “Just when we thought the dust was beginning to settle we see another day of huge falls across the world.”
The FTSE 100 Index initially opened more than five per cent down following heavy falls for Asian markets overnight, but losses were clawed back through the morning amid hopes of a recovery in the US.
But Wall Street’s Dow Jones Industrial Average fell three per cent early on as gloomy economic data showed the biggest monthly fall in US industrial production since 1974 - adding to recession fears.
Across Europe France’s CAC 40 and Germany’s Dax fell almost five per cent and six per cent respectively. Switzerland’s central bank also announced the latest multi-billion bail-out - this time of banking giant UBS.
But Mr Hughes added: “The difference from past moves is the fact that the main worry is not the bank bail-out plan but the fears of global recession.”
Oil prices fell below 70 dollars a barrel at one point on concerns over weakening demand. Oil cartel OPEC said it would bring forward a meeting scheduled for November to the end of next week.
Among the biggest blue chip victims were heavyweight mining and oil stocks - as well as those firms exposed to the ailing housing market after building supplies firm Travis Perkins warned on profits. The FTSE 250 company, which owns DIY chain Wickes, saw its shares slump by more than a third after telling investors recent trading had been worse than expected.
The latest turmoil has come despite the huge banking sector rescue packages announced around the world by governments desperate to end the global financial crisis.
In London, the battered banking sector was experiencing mixed fortunes in the wake of the Government’s rescue plan, which will see taxpayer-funded cash injections of up to £37 billion in HBOS, Lloyds TSB and Royal Bank of Scotland (RBS). HBOS was down two per cent although merger partner Lloyds TSB and RBS were virtually unchanged.