'Wrong figure' triggered Footsie drama

The City trader who sparked last night's dramatic slump on the Footsie index of 100 leading stocks did so by keying in an incorrect figure.

The London Stock Exchange says its own inquiries have backed earlier speculation that a trader's 'sell' order was inadvertently too high. An extra zero is thought to have turned a transaction for £30minto £300m, sending the Footsie sliding by around 140 points within minutes.

Those losses have been recovered today, although the LSE says it now wants to investigate the computer safety checks at the firm involved.

City trading floors have been buzzing with speculation as to the identity of the investment bank at the centre of the controversy. US firm Lehman Brothers has been linked to the incident, but it has declined to comment.

A spokesman for the LSE has confirmed: "The member firm involved put in the order with the wrong multiple."

He adds that the LSE will want to know whether the right "checks and balances" were in place to prevent such transactions taking place.

It will report its findings to the Financial Services Authority, with the firm involved being subject to a possible fine.

The sell order sent some of the market's biggest stocks, including Vodafone and BP, significantly lower at the end of the session last night. This could have left some small investors out of pocket at the end of the day.

Jeremy Batstone, of NatWest Stockbrokers, says the incident highlights the danger of share dealings in the opening and closing minutes of a session. "It is possible that you can get caught up in some of the volatility over and above that you would normally see in the course of the day."

By 2.30pm, the index of blue-chip stocks was ahead 155.8 points at 5845.3.