'Don't panic' - City investors told

Investors were urged to sit tight today as the FTSE 100 index plunged more than 100 points in early trading.

By mid-morning the London Market was down 127.5 points at 3476.2, nearly 50% below its high of 6930.2 reached in December 1999.

But despite the market looking set to close down for the 11th consecutive session, investors were urged not to lose their nerve.

Anna Bowes, of independent financial advisers Chase de Vere, said: “There is no point in panicking, that is absolutely the worse thing to do.

“There are clear reasons why this is happening and that is uncertainty.”

She said the market was down because of uncertainty over corporate profitability and the threat of war with Iraq.

But she added that once there was some certainty, such as if the country went to war, then the market would bounce back.

She said anyone who sold now would be selling for a loss, and if they kept the money in cash they could have it sitting in an account paying 2% net when the market recovered.

Robert Guy, of IFA firm Timothy James and Partners, was less confident. “I’m struggling to be positive with this market.”

He said people needed to look at their individual circumstances and what the money was being saved for when deciding whether they should stay in the market or realise their losses and come out.

He added that people who thought they would worry about their investment all the time might be better off selling.