FTSE falls as panic spreads

Last Modified: 10 Oct 2008
By: James Blake, Faisal Islam

Shares on the London Stock Exchange in freefall during early session trading as panic spreads across the world markets.

As the FTSE fell a dramatic 10 per cent when it opened this morning one analyst declared:

"It's very close to panic. We are drowning in a sea of red numbers and fundamentals have gone out the window."

It was prompted by large falls last night on Wall Street that had carried on this morning in Asia.

Fearful investors have been rushing to sell in the belief the banking crisis is now provoking a serious and deep recession.

It was another day of meltdown in the City:

The Nikkei index in Tokyo suffered its biggest drop since 1987 losing nearly 900 points or 9.6 per cent of its value.
The BSE index in India fell 7.35%
In Europe the selling continued forcing prices lower. In Germany the DAX was 9 per cemt lower.
The CAC in France was down over 8 per cent.
In London, the FTSE fell by more than 300 points and now stands below the 4000 mark - a 7.6 per cent drop.

Faisal Islam on recession fears

Our economics correspondent Faisal Islam speaks on the growing fears of a global deep recession:

The latest slump came despite co-ordinated interest rate cuts and this week's efforts by the UK Government to bolster UK banks.

Matt Buckland, a trader at CMC Markets, said markets were reeling because of recession fears and the fact that the fire-fighting efforts of central banks worldwide had not resulted in any thawing of interbank lending.

He said: "US and European taxpayers have collectively tried to dig the financial sector out of one almighty hole but the response certainly hasn't been as planned."