FTSE shares fall again in week of turmoil

Blue-chip shares took another knock today as gains earlier in the session disappeared in the wake of more bad news from the US.

The FTSE 100 Index had been in positive territory for much of the day as investors hunted down bargains after Thursday night’s 190 point loss.

But after initial 100 point gains the market retreated as Wall Street opened. It eventually closed 5.9 points lower at 4224.1.

It meant the blue-chip index fell in all five sessions this week, slumping by 391 points in total to hit new five-year lows.

The decline has wiped £93 billion from the value of the Footsie and put further pressure on the pension funds which track Britain’s top 100 companies.

Today’s reversal of fortunes came after poor consumer confidence figures in the US knocked hopes of an upbeat finish to the week on Wall Street.

Analysts had expected the Dow to continue the late rally seen towards the end of Thursday night’s session.

However, the Dow Jones slumped by 167 points at one stage and took the Footsie with it, pushing the London market almost 60 points lower.

Only heavyweight telecom stocks survived the afternoon’s sell off, with Vodafone remaining 5% ahead and Cable & Wireless up 7% after an AGM statement which provided investors with few shocks.

But with confidence so fragile, City analysts feared that worse was still to come on the London market.

Alex Scott, analyst at Seven Investment Management, said: ‘‘Although we are now closer to the bottom, it’s unlikely we have reached it yet. There’s a risk we will have more of a shake-out before we can say the worst is over.’’

He believed it may take some time before confidence is restored following a string of accountancy scandals in the US.

Fears about accounting standards and the health of the US economy have dogged Wall Street for months, and investors are increasingly worried about where the next scandal will come from.

The second quarter earnings season in the US and UK is also due to begin next week and is certain to put further pressure on stocks.

Amid all the turmoil today, fashion house Burberry made a lacklustre debut on the London Stock Exchange.

The starting price of 230p for conditional trading was set last night as the upmarket label shrugged aside fears over stock market volatility.

But the stock failed to catch the eye of the City and shares were 5p lower at 225p by the close.