Global recession fears lead to heavy FTSE losses

The London market suffered a second session of heavy losses today as fears over the scale of the global recession continued to haunt stocks.

A late sell-off on Wall Street fuelled the gloom as the Dow Jones Industrial Average finished last night’s session almost 3% lower.

The FTSE 100 Index drifted lower to stand 63.1 points down at 4069.1 by mid-morning. Miner Xstrata topped the fallers board, down 106.5p to 771p, amid fears of weaker global demand.

Halifax Bank of Scotland was next on the list after the UK government set out requirements for banks wishing to access its recapitalisation scheme. It was seen as a further blow to those investors hoping for a last-ditch alternative proposal to the current HBOS takeover by Lloyds TSB.

HBOS dropped 8.2p to 66.3p, while Lloyds TSB shed 11.2p to 137.8p and Royal Bank of Scotland fell 3.4p to 41.3p.

Barclays, which announced changes to its own fundraising plans in an attempt to head off a shareholder revolt, was down 10.1p at 144p.

And in a busy session for corporate updates, building supplies firm Wolseley recovered from a weak start to stand 7% or 21p higher at 292.25p. It reported a 45% drop in first quarter profits, but analysts warmed to cost-savings plans, including the reduction of 2,000 jobs in the UK.

Outside the top flight, easyJet shares dropped sharply after it reported a 45% drop in profits and said founder Sir Stelios Haji-Ioannou had declined to approve the accounts. The carrier fell 46p to 230.75p, a drop of 16%.

Premier Foods was also under pressure, off 1.75p to 28.75p, as it scrapped its previously announced half-year dividend. Premier said trading was in line with expectations and added that lenders had agreed to defer a covenant test.