FTSE reaches lowest level in six years

The London market suffered another day of turmoil today, sliding a further 2% as the sell-off continued.

By the close of trading the FTSE 100 Index was down 80.9 points at 3777.1, its lowest since August 2nd 1996 and wiping another £19 billion from blue-chip share values.

However, a late recovery on the market meant it closed far above its mid-session low of 3625.9 - when it was down 232.1 points.

Traders said stocks pulled back after US markets surged - on Wall Street the Dow Jones was up more than 200 points by the time the London market closed, despite a dismal opening.

US stocks were hurt in early trading by further worries of the knock-on effect of Enron on financial stocks. However, shares rallied after top officials from Citigroup and JP Morgan Chase appeared at the Senate to defend their bank’s actions in dealing with Enron.

But despite pulling back from sharp losses, London shares still took a battering.

Financial stocks were again under pressure. Royal & Sun Alliance slid 10%, off 17p at 149p, Aviva fell 6½p to 348½p, Legal & General was down 1¼p at 103¾p and Prudential fell 5½p to 414½p.

Among the banks, Royal Bank of Scotland lost 39p at £14.36, HSBC drifted 14p to 681p, Lloyds TSB fell 16½p to 538p and HBOS slid 13p to 559p.

Abbey National reversed early gains to fall 19p to 638p. Shares had risen early in trading after the City was pleased Abbey’s bad debt provisions were no worse than expected and that it unveiled a 5% dividend rise.

A string of high street names also littered the Footsie fallers board.

Argos group GUS fell after a first-quarter trading update confirmed that consumer spending had moderated.

It still posted respectable underlying sales of 5% but shares closed down 18½p at 461½p.

Other retailers falling back included B&Q-to-Comet group Kingfisher, off 8%, down 15p at 165p, electrical specialist Dixons, down ¾p at 154¼p, chemist Boots, 19½p weaker at 553½p and Marks & Spencer off 15p at 305p.

Supermarket chain Sainsbury’s lost 23p to 287p after first-quarter sales came in below analyst forecasts.

Rival Tesco fell 8¼p to 189¼p and Safeway shed 9½p at 221p.

Among just seven stocks which managed to rise was drugs giant GlaxoSmithKine. The group tentatively came back from a morning of losses, up 2p at £10.59, as the City digested its second quarter figures.

It reported a 7% rise in profits over the last quarter, in what it described as a ‘‘challenging’’ period for the pharmaceuticals industry.

The group said pre-tax profits for the three months to June 30 rose to £1.83 billion while sales were up 6% at £5.4 billion.

The biggest Footsie risers were EMI up 8p at 207p, Reckitt Benckiser up 16p at £10.04, Exel up 5½p at 698½p, Amersham up 1½p at 457p and GlaxoSmithKline up 2p at £10.59.

Fallers were Royal & Sun Alliance down 17p at 149p, Old Mutual down 7¼p at 72¼p, Kingfisher down 15p at 165p and Invensys down 5p at 62¼p.