FTSE dives on recession news

The FTSE 100 Index dived below the 4,000 barrier today after grim economic figures heightened fears of a deep and prolonged recession.

The FTSE 100 Index dived below the 4,000 barrier today after grim economic figures heightened fears of a deep and prolonged recession.

With the UK economy contracting by 1.5% in the fourth quarter of the year, the Footsie slid 62.2 points to 3990 at mid-morning. It had been higher than 4,000 prior to the latest statistics, which confirmed the UK is in recession.

Barclays was the heaviest faller, down for a ninth session in a row by 8p to 51.2p amid continued fears that it will have to raise more capital.

The latest slump came despite attempts by chief executive John Varley to reassure investors, including his forecast that the bank will make a profit for 2008 after taking all necessary writedowns on toxic loans.

Among rival firms, Lloyds Banking Group fell 1.9p at 47.2p and HSBC dropped 4p to 523p. Royal Bank of Scotland was unchanged at 12.2p.

Insurers were also struggling due to ongoing worries over capital requirements and ahead of trading updates due next week. Aviva was off 19.75p at 263.25p, while Legal & General shed 6.3p to 52.5p and Prudential fell 19.25p to 287.25p.

The biggest decline in the FTSE 250 Index came from Barratt Developments after Citigroup cut its recommendation on the housebuilder to sell. Shares dropped 12% or 9.75p to 69.75p.

In corporate news, pubs chain Marston’s rose 2p to 99.25p after it reported a 6% drop in like-for-like profits at its tenanted division, a performance analysts said compared favourably with rivals Punch Taverns and Enterprise Inns.

Punch lost gains seen yesterday to decline 3.75p to 35.5p, a fall of 10%.

Back in the top flight, Morrisons recovered from yesterday’s weak session to climb 4p to 256.75p. Its shares dropped yesterday despite posting industry-leading sales figures for the Christmas period.

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