The FTSE 100 Index fought back from lows below the 4000 barrier today in the wake of figures confirming the official start of the UK recession.
The Footsie recovered from a fall of nearly 100 points – to close down almost flat, off 0.2 points at 4052.5 – despite figures revealing the UK economy contracted by 1.5% in the fourth quarter of 2008 in the worst performance since 1980.
Despite the widely-anticipated confirmation that the UK was in recession, today’s figures from the Office for National Statistics (ONS) showed the plunge was sharper than forecast, sparking fears of a deep and prolonged recession.
The pound also suffered a fresh slump – down to its lowest level against the dollar since 1985, although it later recovered a little to stand at 1.37 dollars.
In the US, economic fears also weighed heavy on stocks.
Poor figures from General Electric and copier and printer maker Xerox Corp added to the downbeat sentiment, which sent the Dow Jones Industrial Average down more than 1% in early trade.
Barclays was one of the heaviest fallers in London, 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 rose 0.2p to 49.3p and HSBC dropped 11.5p to 515.5p. Royal Bank of Scotland was 0.1p lower at 12.1p.
Insurers were also struggling due to ongoing worries over capital requirements and ahead of trading updates due next week. Aviva was off 19p at 264p, while Legal & General shed 3.4p to 55.4p and Prudential fell 18p to 288.5p.
Supermarkets saw gains despite ONS figures showing the overall value of retail sales last month fell by the most since records began in 1986. Sainsbury’s rose 2.25p to 302.75p, while Tesco was up 6.6p at 356.5p.
Morrisons recovered from Thursday’s weak session to climb 5.75p to 258.5p. Its shares dropped in the previous session despite posting industry-leading sales figures for the Christmas period.
One of the biggest declines in the FTSE 250 Index came from Barratt Developments after Citigroup cut its recommendation on the housebuilder to sell. Shares dropped nearly 17% or 13.25p to 66.25p.
In corporate news, pubs chain Marston’s rose 2.5p to 99.75p 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 on Thursday to decline 3p to 36.25p, a fall of 8%.
The biggest Footsie risers were Randgold Resources up 199p at 3095p, Man Group up 8.75p at 215.5p, AstraZeneca ahead 101p at 2881p and Scottish & Southern up 38p at 1198p.
The biggest Footsie fallers were Old Mutual down 7.8p at 49.5p, Barclays off 8p at 51.2p, Liberty International down 54.5p at 385.75p and Amlin down 29.75p at 364.25p.