FTSE 100 heads for sharpest fall since 1987

FTSE 100 heads for sharpest fall since 1987
Graham Ruddick and Malcolm Moore
Oct 07, 2008

http://www.telegraph.co.uk/finance/markets/3146097/
FTSE-100-heads-for-sharpest-fall-since-1987.html

The FTSE 100 tumbled more than 6pc and is heading for its worst day since 1987 as the global financial crisis deepens.

The UK's index of leading shares dropped more than 300 points shortly after the open and continued falling during a tumultuous day's trading. By 3:30pm in London the index was off 335 points, or 6.7pc. It has not fallen more in a day since October 1987.

Shares in HBOS, Royal Bank of Scotland, Barclays, Lloyds TSB and HSBC all registered sharp falls.

The intensity of the banking crisis that has spread from America to Europe's shores also rattled investors on Wall Street. The Dow Jones Industrial Average tumbled through the 10,000 mark for the first time in four years and the Standard & Poor's 500 Index was also lower.

Miners added to the pain for investors after investment bank UBS warned earnings in the mining sector could fall 46pc this year and warned commodity prices could drop another 25pc as the global economy slows.

The whole sector tumbled, with Kazakhmys and Eurasian Natural Resources leading the fallers.

In Europe, stock markets in Germany, France, Italy and Spain were also down between 4pc and 5pc, while Russian stocks tumbled 12pc as the rouble-denominated Micex index slumped to its lowest level since October 2005.

Mike Lenhoff, the chief strategist at Brewin Dolphin, said the markets needed to see leadership from politicians around the world in tackling the crisis.

In another turbulent day, on the foreign-exchange markets, sterling and the euro weakened against the dollar and oil slid to $86.18 as fears of a global slowdown mount.

Earlier in Japan, the Nikkei Exchange was down 322.35 points, or 2.95pc, in the early afternoon at 10,615.79. The benchmark Shanghai composite index lost 109.12 points, or 4.76pc, to 2184.68.

A similar picture emerged across India, South Korea, Hong Kong, Taipei and Australia as worries spread that Asia may be hit harder than many analysts initially thought.

"It's becoming increasingly evident that the fallout of the banking crisis is rapidly spreading around the world. It is clear Asia will not escape unscathed," said Timothy Bond, Merrill Lynch's chief Asia economist.

Simon Denham of Capital Spreads warned that the increasing trend across Europe of guaranteeing depositors savings, as seen by the Irish, Greek, Danish and possibly the German governments, could have serious consequences.

"If we effectively nationalize all our banks in Europe then what is that going to do in terms of growth?" he said. "If any loan or mortgage that anyone takes out is effectively approved by the government it's not good. People talk about the lost decade in Japan and we could say that money is going to be difficult to come by for a good few years here.