FTSE slides into bear market

The FTSE 100 Index stood more than 2% lower today as investors dived for cover in the wake of more depressing economic and corporate news.

A bleak session on Wall Street added to the pain, causing the Footsie to slide more than 120 points and reverse tentative gains seen on Monday.

The decline below the 5400 mark put the top flight index back into bear market territory, as defined by a 20% drop on London’s high seen last year.

Markets across Europe were also suffering after US markets slid on fears that two mortgage providers would have to raise even more capital.

That did little for confidence in financial stocks in London, with Royal Bank of Scotland among those suffering following a drop of 5%.

But investors in London also had to digest more bleak news from the UK house market after builder Persimmon and estate agency Savills reported sharply lower transaction levels and selling prices.

A warning from the British Chambers of Commerce that the UK was on the brink of recession added to concerns.

At the same time, oil rebounded in Asian trading on a weaker dollar and renewed buying interest after prices plunged nearly four US dollars a barrel in the previous session.

Paul Webb, chief dealer at CMC Markets, said: “Credit woes across the Atlantic remain very much at the heart of traders’ concerns whilst the fact crude prices have refused to push below $140 a barrel is also clearly a worry.”