Footise closes down as investor confidence falters

The Footsie 100 Index has closed down 125.8 at 4084.9.

Shares dived today as a gloomy forecast by Alan Greenspan and concern about a US strike on Iraq battered investors' fragile confidence.

The market had been on the back foot all morning but the sell-off gathered momentum when Wall Street moved lower in early trading.

Federal Reserve chairman Mr Greenspan warned the US economy was still suffering from the impact of September 11 and stock market volatility.

Vodafone dropped 6%, or 6p to 92½p after a downgrade from house broker UBS Warburg.

Of the banks, Royal Bank of Scotland dived 53p to £15.05 while HSBC was down 12½p at 712½p, Lloyds TSB off 16p at 549p and HBOS 7p lower at 698p.

But the heaviest faller was defence group BAE Systems which closed 14% lower, off 39p at 232p, after disappointing the City with half-year results.

Steel group Corus also fell, 4¼p to 50¾p, after poor half-year results and a gloomy forecast that a recovery in its markets remained uncertain.

And it was also another bad day for those blue-chips on their way out of the Footsie with British Airways dropping 5%, or 7p to 127p.

Energy generator International Power, another due to join the FTSE 250 later this month, fell 2¼p to 107¾p and music giant EMI fell 6¾p to 167p.