FTSE plummets at market close

The FTSE 100 Index slumped to its lowest close for almost three months today as economic fears dogged blue chip stocks.

The Footsie languished below the key 4,000 level for much of the session, with sentiment hit by doubts over America’s economic stimulus plan.

It regained some poise to close up 27.3 points at 4006.8 after the Dow Jones Industrial Average ticked up a little in early trade following President Barack Obama’s 75 billion US dollar (£52.7 billion) mortgage relief package.

But the economic woes dogged trading on these shores, with the recession also in sharp focus today with the release of the latest interest rate meeting minutes.

It emerged that Bank of England policymakers have already given the go-ahead to ask for consent to use quantitative easing – and now experts are urging a swift and decisive start to the programme.

Among stocks, beleaguered insurer Legal & General and Royal Bank of Scotland suffered double digit declines.

Part-nationalised RBS was hit hard after a report said it would need to stump up £8 billion to take part in the state-backed insurance scheme designed to cap losses on toxic assets.

RBS shares plunged 13%, or 2.6p to 18.1p.

Insurer Legal & General was also a big faller – down 5.3p at 40p – despite yesterday’s assurances over its capital position.

It also emerged that the stock has been the target of short-selling in recent days.

Other insurers were hit, with Aviva off 2.75p at 304.25p and Prudential down 18.5p at 261p ahead of this Friday’s full-year new business figures.

Battered Lloyds Banking Group – 43% owned by the taxpayer – also surrendered earlier tentative gains, closing down 0.7p at 50.8p having been up as much as 3% at one stage.

A number of stocks meanwhile turned ex-dividend today, which means investors will not be eligible to receive the next dividend payout.

This hit oil giant BP, down 14.75p at 477.75p, and mining group Rio Tinto, which was down 13p at 1884p.

But property group Liberty International was enjoying better fortunes as it emerged as the only major firm in its sector so far not to announce or say it is considering moves to tap shareholders for cash. Shares rose 19.25p to 365.25p.

In the second tier, Sports Direct International saw mixed trading after an update seeking to reassure over trading. Shares rose as much as 6% early on, but later slipped to stand 0.25p higher at 58.5p.

Elsewhere, confectionery chain Thorntons clawed itself back from losses of more than 4% following news of a 39% slump in half-year profits to close up 0.5p at 52.25p.

The biggest Footsie risers were Liberty International up 19.25p at 365.25p, TUI Travel ahead 12.25p at 244.75p, Admiral up 34.5p at 874.5p and FirstGroup up 10.5p at 280.25p.

The biggest Footsie fallers were RBS down 2.6p at 18.1p, Legal & General off 5.3p at 40p, 3i down 18.25p at 233p and Prudential down 18.5p at 261p.