FTSE down after another day of financial turmoil

Trading screens across London turned red today as blue-chip stocks took a fresh pounding on global recession fears.

Crude oil tumbled below 50 US dollars a barrel while lower metal prices also hit miners, offsetting gains for beleaguered banking stocks.

The FTSE 100 Index closed 130.7 points down at 3875, the lowest since the financial turmoil of mid-October, following a 5% dive on Wednesday.

Sentiment was hit by further big falls on Wall Street early on as investors were caught off-guard by a worse than expected jump in unemployment claimants to a 16-year high.

Insurers and miners took the brunt of London’s fall in a difficult session. Traders said insurers had been hit hard by big sell-offs of their counterparts in the US, adding to general concerns over their capital strength in struggling equity markets.

The fallers board was topped by Aviva, which dropped 20% or 59p to 292.75p. Other double-digit losses were nursed by Legal & General, which shed 9.4p to 60.3p and Prudential, off 48p to 246p.

Falling aluminium and copper prices meanwhile dented heavyweight miners, led by Eurasian Natural Resources – off 32.35p at 191.4p – and Vedanta Resources, which was 50.25p lighter at 387.75p.

Crude oil also hit the lowest level for nearly two years, sinking below 50 dollars a barrel at one point as the slowdown fears lingered.

With black gold at little more than a third of July’s record, BP shed 24p to 464p and Royal Dutch Shell lost 100p to 1486p.

Among the risers, many banking stocks recovered ground after a difficult previous session. Royal Bank of Scotland gained 3.7p to 46p on the day investors approved a £20 billion government-backed bail-out scheme by an overwhelming margin

HBOS was the leading Footsie riser with a gain of 7.7p to 72p a day after investors in Lloyds TSB – up 6.8p to 125.3p – approved a rescue takeover of the bank.

Barclays however proved the exception, dropping 1.9p to 127.7p after SocGen brokers lowered their price target on the stock.

Marks & Spencer was a notable riser as the retail sector recovered after falling heavily yesterday in the wake of more broker downgrades.

As M&S slashed prices in a one-day 20% off sale, shares rose 3% or 6.5p to 206.5p. Sentiment was also helped by better-than-expected figures showing a 0.1% drop in sales volumes for October.

Fashion chain Next cheered 40p to 970p, B&Q owner Kingfisher rose 3.3p to 102.9p and Debenhams, which is also cutting prices this week, rose 1.5p to 25.25p – a gain of 6%.

Car parts business Halfords also gained 7% or 17.25p to 240.5p after half-year profits came in ahead of forecasts.

The biggest Footsie risers were HBOS up 7.7p at 72p, RBS ahead 3.7p at 46p, Lloyds TSB up 6.8p at 125.3p and Next ahead 40p at 970p.

The biggest fallers were Aviva off 59p at 292.75p, Prudential off 48p at 246p, ENR down 32.25p at 191.4p and Legal & General which finished down 9.4p at 60.3p.