FTSE falls below 4000 barrier

The FTSE 100 Index slipped below the 4000 barrier today as investors reacted to heavy overnight losses for Asian markets.

Mounting recession fears saw Japan’s Nikkei slump 11.4%, following a near-8% fall for New York’s Dow Jones Industrial Average.

London’s FTSE initially opened down 200 points, or 5%, lower, but hopes of a US rally later saw losses pared back to 139.3 points, leaving the index at 3940.3 by mid-morning.

Thomson owner TUI Travel was the leading blue-chip faller, down 24% or 61.25p to 188.5p, after its German part-owner said it had no intention of taking outright control of the group. Speculation over such a move caused shares to rally last week.

Building-related firms were also nursing some heavy losses after FTSE 250 firm Travis Perkins lowered its profits guidance and said the recent financial turmoil had quickened the downturn in its sector. It is unlikely to pay a dividend for this year, causing shares to fall 32% or 153.75p to 327.25p.

B&Q owner Kingfisher was down 10.1p to 107.9p and building and plumbing supplies rival Wolseley lost 47p to 299p.

Sentiment across the retail sector was weak, with Next down 80.5p at 876p and Tesco off 19.2p at 315.8p, a fall of 6%.

Continued speculation that elements of the government’s £37bn (€47bn) banking bail-out package may be reworked saw mixed fortunes for the banks involved.

Royal Bank of Scotland edged up 0.9p to 65.9p, with Lloyds TSB 6.3p ahead at 156.5p. But Lloyds’ merger partner HBOS remained in the doldrums, slipping 2.1p to 83.6p, while Barclays was off 13.5p at 226p.

In the FTSE 250 Index, Britvic shares were up 6% or 10.5p to 182.5p after the drinks firm defied weak consumer conditions with a sales gain of 4.8% for the year to September 28.