FTSE down 1%

The slide in US stocks to the lowest level since 1997 put fresh pressure on the FTSE 100 Index and other world markets today.

Investors had been braced for more heavy falls in London after the Dow Jones Industrial Average tumbled more than 3% last night on lingering fears about the financial system and world economy.

The FTSE 100 Index held firm for a while but later stood 1% or 44.6 points lower at 3806.2 by mid-morning. Asian markets followed Wall Street’s lead, with Hong Kong’s Hang Seng down 3%, while European stocks were also under pressure.

Defensive stocks prevented the London market from suffering an even bigger fall, with pharmaceuticals pair GlaxoSmithKline and AstraZeneca up 9p at 1127p and 34p at 2427p respectively.

Royal Bank of Scotland clung to positive territory, up 0.1p at 21.3p after rising 9% yesterday on speculation it will use results on Thursday to announce the creation of a bad bank for billions of assets.

The biggest falls came in the insurance sector, with Legal & General down 2.6p at 34p, Prudential off 17.5p at 271.25p and Aviva 14.25p lower at 272.25p. Among weaker mining stocks, Kazakhmys fell 12p to 248.25p and Rio Tinto eased 80p to 1743p.

Elsewhere, results from the construction sector were well received as housebuilder Redrow gained 3.75p to 125.75p and infrastructure services company Morgan Sindall improved 4%, or 17.5p to 477.5p.

The gain for Morgan Sindall came after profits of £71.4 million exceeded market expectations and the company said its forward order book gave it a “measure of confidence” about 2009 trading.

Telecoms firm Spirent was another second-tier stock on the front foot. Shares rose 9% or 3.25p to 40.25p after it reported a 9% rise in revenues and said sterling’s weakness would boost trading this year.