FTSE sheds 5% amid recession fears
- 00:01:36
- ITN
FTSE sheds 5% amid recession fears
The FTSE 100 has finished the session more than 5 per cent down at its lowest level since April 2003 over mounting recession fears. The index ended the day 218.2 points down at 3861.4 while on Wall Street, the Dow Jones Industrial Average was 175.9 points lower at 8402.1 by 5.05pm. This followed a near-8 per cent slump overnight, which spooked Asian markets and saw Japan's Nikkei plummet 11.4 per cent. There were also large declines across Europe, with the Dax in Germany down 5 per cent and the CAC 40 in France nursing a 6 per cent drop. The latest slumps come despite the huge banking sector rescue packages announced around the world this week by governments desperate to end the global financial crisis. Continued speculation that elements of the Government's £37 billion banking bail-out package may be reworked saw mixed fortunes for the banks involved. Royal Bank of Scotland was unchanged at 65p, with Lloyds TSB 0.2p lower at 150p. But Lloyds' merger partner HBOS remained in the doldrums, slipping 1.6p to 84.1p, while Barclays was 26p off at 213.5p a drop of almost 11 per cent. Thomson owner TUI Travel was the leading blue-chip faller, down 55.4p at 194.4p, a 22 per cent drop, after its German part-owner said it had no intention of taking outright control of the group. Speculation over such a move caused shares to rally last week. Building-related firms also suffered some heavy losses after FTSE 250 firm Travis Perkins lowered its profits guidance and said the recent financial turmoil had quickened the downturn in its sector. It is unlikely to pay a dividend for this year, causing shares to fall 31 per cent or 150.75p to 330.25p. In the top flight, B&Q owner Kingfisher was down 11.2p to 106.8p and building and plumbing supplies rival Wolseley lost 60.75p to 285.25p, or 18 per cent. Sentiment across the retail sector was weak, with Next down 94.5p at 862p. Among the supermarkets, Tesco was off 17.1p at 317.9p and Sainsbury's 12.25p cheaper at 245p after brokers at Merrill Lynch lowered their target prices on both firms. Further falls in crude oil prices on demand concerns weighed again on the petrochemical majors. As oil slid to below $70 a barrel at one stage - less than half its July peak - BP shed 16.75p to 397.5p and Royal Dutch Shell was 112p lighter at 1235p. The FTSE winners were Rexam up 13.25p at 309.5p, Centrica up 3.5p at 285.75p, Severn Trent ahead by 10p at 1266p and National Grid up 3.5p at 636.5p. The losers were Thomas Cook down 44p at 145.2p, TUI Travel down 55.35p at 194.4p, Old Mutual off 13.7p at 49.6p and Prudential down 72.25p at 297.75p. Meanwhile, the Bank of England has promised further help to alleviate cash-starved markets in an overhaul of its money market operations. From Monday, the Bank is setting up a new "discount window" to allow banks to borrow safe Government gilts against a wide range of collateral during market stress. It will also permanently broaden the range of assets banks can borrow against during its longer-term lending operations. Governor Mervyn King said the moves to improve liquidity would "add certainty" and time for banks to deal with heightened stress. But the Bank's briefing notes warned: "Such insurance is not and cannot be a source of longer-term funding to the banking system." Overnight inter-bank lending rates have fallen to 5.18 per cent - well above the Bank's 4.5 per cent official rate - while longer-term three-month lending costs edged down from 6.21 per cent to 6.18 per cent.
ITN | October 16, 2008
