FTSE battered in morning bloodbath

The FTSE 100 Index slumped by as much as 5% at one stage today as the panic-selling sweeping London’s financial markets intensified.

The decline mirrored the performance in the United States last night after the Dow Jones Industrial Average dived by 635 points in the worst performance since December 1, 2008 – the sixth largest in the Dow’s history.

Prospects looked even more bleak as the FTSE 100 Index slid to 4791 before the market pulled back from the brink to stand just 54.8 points lower at 5013.6.

It was the first time in more than a year that the top flight index has traded below the 5,000 barrier, while London’s benchmark index is currently on the worst run in its history after four consecutive sessions of triple digit losses.

Banking shares continued to bear the brunt of the turmoil as investors fretted about their exposure to indebted European economies and after heavy losses for counterparts in New York last night as global recession fears intensify.

Taxpayer-backed Royal Bank of Scotland was the FTSE 100 Index’s biggest faller, down by 2.2p at 25.1p. It has now lost a third of its value in the past two weeks and is less than half the Government’s break-even point of 51p. Barclays and HSBC also dropped 4.8p and 18.5p at 170.6p and 519.25p respectively, while Lloyds Banking Group fell 3% or 0.9p at 31.9p.

Oil prices, which are often seen as an indicator of optimism in the global economy, continued to fall today with Brent crude at one point slipping below 100 US dollars per barrel – a level not seen since February. Shares in BP fell 8.1p to 394.9p, while Royal Dutch Shell declined 16.25p to 1879.5p.

In corporate news, shares in bakery chain Greggs slumped 7% after it reported a rise in underlying half-year profits but said the second half of the year was likely to be tough. The stock fell 36.75p to 445.25p.

Meanwhile, shares in InterContinental Hotels were among the most resilient in the top flight after the Holiday Inn operator reported a 23% rise in profits to $269m after revenues per room rose by 6.7%.

It also said it intends to increase its UK estate by a further 28 hotels from the current total of 269, an expansion that will create up to 3,000 jobs.