FTSE tumbles

The FTSE 100 Index tumbled back below the 6400 barrier today as investor doubts over plans by central banks to ease the credit crunch knocked 3% off UK blue chips.

The Footsie shed 195.6 points to close at 6364.2 after a torrid day on the stock market.

Falls were seen on both sides of the Atlantic as investors feared the joint effort between the Bank of England and four global counterparts announced yesterday would not go far enough.

A poor opening for the Dow Jones Industrial Average compounded losses in London, with US stocks also on the slide after data revealed a spike in wholesale prices, which could hamper further rate cuts.

In the UK, downbeat corporate news also added to the gloom, which left just five blue-chip stocks in positive territory.

Banks suffered the most, led down by Halifax Bank of Scotland after a trading update fuelled concerns about pressure on margins and funding costs following the credit squeeze.

Investors ignored HBOS’s assurance of underlying earnings in line with market expectations as its shares slipped 68.5p to 764.5p, a drop of 8%.

Other major financials nursing further losses were Royal Bank of Scotland, off 28.5p to 433.75p, Barclays down 33p to 523p and Lloyds TSB, which fell 27p to 471.75p as the heavily-weighted sector dragged on the index.

Crisis-hit mortgage lender Northern Rock also suffered further falls, dropping 13.2p to 86p – close to its all time record-low close of 84.1p.

The bank’s share price misery came as reports said that one of its potential rescuers, investment firm Olivant, was ready to pull out of the race for the company.

But the most spectacular decline came from cleaning-to pest control firm Rentokil Initial. The firm was the Footsie’s leading faller, down 22% or 32.4p to 114.3p, after warning that weaker consumer spending would leave profits at its City Link operation around £10m lower than expected.

The world’s biggest drinks can maker Rexam also slipped to losses of more than 16% after warning of the impact of soaring oil costs and weaker US dollar on the firm’s results. Shares were off 78.5p at 409p.

Other stocks on the back foot included Penguin-to-Financial Times publisher Pearson, down 41.5p at 704p after a Credit Suisse downgrade raised doubts over the firm’s US outlook.

Oil and gas exploration group BG led a shortened risers board amid speculation about another significant find in Brazil. Shares were 8p higher at 1091p.

Drugs giant GlaxoSmithKline also advanced on a push from Societe Generale, which emphasised the defensive qualities of the firm’s wide-ranging product portfolio. This moved the shares 3p higher at 1317p.

In the second tier, telecoms firm Spirent Communications was the leading riser, up 2.75p to 60.5p, after it said second-half earnings would be ahead of expectations.

The only Footsie risers were BG Group up 8p at 1091p, Tullow Oil ahead 4.5p at 675.5p, Reckitt Benckiser up 18p at 2975p, Sage Group up 0.75p at 220.75p and GlaxoSmithKline up 3p at 1317p.

The biggest Footsie fallers were Rentokil Initial down 32.4p at 114.3p, Rexam off 78.5p at 409p, Northern Rock down 13.2p at 86p and Taylor Wimpey down 21.25p at 207.75p.