Shares suffer £34bn black day

by ALEX BRUMMER, City Editor

Shares in London and around the world plunged to their lowest levels since September 11 yesterday amid fears of a global collapse in company profits.

The FTSE index of Britain's top 100 shares tumbled 141.1 points to 4630.8, wiping £34billion off the wealth of investors and savers. Only three top FTSE shares finished the day higher as trading screens turned red.

On Wall Street, shares had opened to heavy selling, falling more than 200 points before bouncing back. Last night, the Dow Jones was 120 points lower at 9,381. Big falls were also recorded in Tokyo,

Hong Kong and Europe. This loss of value could not come at a worse time for the savings industry, with pension funds and insurance firms needing a stronger stock market to boost weakening performance.

Markets have been upset by a series of Wall Street scandals that have destroyed the credibility of many leading companies.

And there are renewed signs that America's recovery is coming to an end, with retail sales, consumer confidence and industrial output plunging.

Wall Street's woes have badly unsettled London share markets already reeling from warnings by Bank of England governor Sir Eddie George that interest rates may rise if the growth in house-price inflation does not end soon.

Over the past week, London shares have fallen by almost 300 points, a loss of 5.8 per cent. Technology shares were hit hard, with mobile operator Vodafone and cable company Telewest among the biggest fallers.

Yesterday's drop was the largest one-day fall since the FTSE index plunged to 4,220 in the wake of September 11.

One investment director said: 'Today, the market feels worse than last September. At least then we knew why it was going down; there was a reason.

'Now there are all kinds of stories around. I am simply trying to protect my clients --and that means selling.'

Concern about Latin America, where signs are growing that the six-month economic crisis in Argentina is spreading to Brazil, has added to the uncertainty.

On the foreign exchanges, the dollar remained under pressure. The pound strengthened to $1.4750 and the euro was worth 95 U.S. cents as trading closed.

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