Footsie continues to slide

There was a sense of deja-vu on the trading floors of London today when the market fell sharply into the red for the second session in a row.

The FTSE 100 Index plunged 55.4 points to 5372.4, having lost 66.6 points yesterday – its heaviest daily fall since the July 7 terror attacks.

Continued fears over the threat of inflation in the United States were a major factor, while a fall in the cost of a barrel of crude oil to below 61 US dollars a barrel weighed heavily on oil stocks.

Experts said there was also an element of profit-taking as investors took a natural pause for breath after the Footsie’s recent rally. Earlier this week, the top flight hit a four-year high above the key 5500 mark.

Henk Potts, an analyst at Barclays Stockbrokers, said: “Although the global economy has been in good shape and companies are awash with cash, there is a slight nervousness this won’t be able to continue.

“The markets have had a stunning performance and are probably just using these slight worries at the moment to take a little bit of money off the table.”

He said many broker projections were for the Footsie to end the year at around the 5500 level. This still appeared to be on track, given the fact the index had already hit this level in the third quarter.

Progress by oil has underpinned much of the Footsie’s progress over the past month. Many of these were firmly in negative territory today, with BP losing 2% of its value and rival Royal Dutch Shell down 1.5%.

The heaviest blue-chip faller was Cadbury Schweppes, which retreated almost 5% after warning it was likely to miss a key financial goal due to disruption caused by recent hurricanes and the rocketing cost of oil.