FTSE in 'Black Monday' slide as market turmoil spreads
FTSE 100 closes down more than seven per cent as markets across the world record dramatic falls (Image licensed under Creative Commons License)
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Gordon Brown is to suggest a £12 billion fund to protect samll businesses when he meets with other European Union leaders in Paris this afternoon.
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Monday, 06, Oct 2008 05:46
The FTSE 100 has joined markets across the world by recording its biggest one day fall since "Black Monday" 21 years ago.
The FTSE 100 dropped 7.85 per cent to 4,589.19 – a fall of 391.06 points – wiping £93 billion off the stock market in a single day and taking the index to its lowest level since 2004.
At one stage, the FTSE 100 was close to falling nine per cent, while the one-day fall was the worst recorded since the crash of 1987.
Meanwhile in the US at 19:46BST (14:46EST) the Dow Jones had fallen by nearly 7 per cent, or 704 points, to 9620.58 with the afternoon session of trading still to go.
The picture was being mirrored around the world: The Brazilian stock market had to be suspended just ten minutes after opening following a ten per cent fall while the Russian stock market was suspended twice before losing 19 per cent on its close today. And in Iceland all trading in financial shares has been suspended while the country's currency lost a third of its value against the Euro in a single day.
Out of the FTSE 100 firms, none recorded price gains, and both banks and commodity stocks took a hit.
Miner Kazakhmys dropped 26.58 per cent, while Eurasian was down 23.74 per cent.
Royal Bank of Scotland was down 20.46 per cent, while Fesnillo dropped 19.86 per cent and Xstrata fell 19.11 per cent.
In Germany, the Dax fell 7.07 per cent, while France's Cac 40 was down 9.04 per cent.
On Wall Street at the Dow Jones was down 4.60 per cent at 12:21 EDT (17:21 BST) - breaching the 10,000 mark for the first time since 2004 - and the Nasdaq dropped 5.66 per cent.
As news filtered through of the FTSE's slide, chancellor Alistair Darling was informing MPs of the government's commitment to ensuring stability in the UK economy.
Mr Darling's statement also coincided with news from Iceland that the government was planning to offer an unlimited guarantee on savers' deposits.
The government had earlier come under pressure for a 100 per cent guarantee of its own.
Germany appeared to have joined a growing list of European Union members to issue such a guarantee this weekend ahead of instigating a last-minute rescue deal for one of its biggest banks, Hypo Real Estate.
It is now understood however that German chancellor Angela Merkel was not preparing to legislate a 100 per cent guarantee but merely expressing a political commitment to protect savers.
Amid the confusion Austria and Denmark followed Germany's apparent lead, which followed identical moves from Ireland and Greece.
Last week protection for UK savers was extended to £50,000, which the government hoped would be its upper limit.
The pressure for an extended savings guarantee also coincides with the inaugural meeting of the National Economic Council, announced by Gordon Brown last week.
The council, dubbed a 'war cabinet' by commentators, will involve an assessment of the current financial situation and analysis of the latest developments in global commodity markets with an eye to their effects on the UK.
According to reports, Ms Merkel did not disclose the 100 per cent guarantee would be issued during a summit of EU leaders on the global economic woe in Paris this weekend.
The guarantees issued by individual member states flies in the face of French president Nicolas Sarkozy's call for coordinated action.
The piecemeal savings guarantees across Europe add to the economic gloom being felt across the world.