Shares slump after a gloomy day on Wall St

Investors hoping for a further rally in blue-chip shares were dealt a blow today when the FTSE 100 Index got off to a depressing start.

The Footsie fell victim to another wave of heavy selling and immediately put back yesterday’s gains to slump 114.8 points to 4182.5.

The London market was again taking its lead from the US after the Dow Jones Industrial Average fell amid gloom about second quarter earnings figures.

Telecoms stocks on this side of the Atlantic were further hurt by a worse-than-expected loss from Swedish handset giant Ericsson.

Vodafone and BT Group both lost 3% and mmO2 fell by more than 5%, while heavyweight banking and oil stocks were among other sectors to feel pain.

Today’s performance wrecks any hopes that the London market was on the road to recovery after its recent tailspin.

Investors had just enjoyed three positive sessions in a row to pull the Footsie back from Black Monday’s six-year low of 3994.5.

Accounting and earnings worries have shattered confidence on world markets and experts said there was no reason to believe the problems had gone away.

Tom Hougaard, trader at City Index, said the volatility remained fierce and feared today could prove to be a tough session for investors.

He said much could depend on the opening on Wall Street: ‘‘This could turn out to be a very ugly Friday unless the US can turn things around.’’