Blair calls for IMF reform as FTSE slips to year low

THE Prime Minister in New York last night called for an overhaul of both the World Bank and the International Monetary Fund as fears over the Clinton presidency helped send London shares to their lowest level this year.

The FTSE 100 index closed below the psychologically important 5,000 barrier on worries over the broadcast of the videotapes of President Clinton's testimony to the Grand Jury, as well as the outlook for world growth.

The FTSE hit a low of 4,899.6 - a fall of 156 points - in the early afternoon, but staged a partial recovery after the broadcast of the tapes, which were not as damaging as some analysts had feared. The index closed at 4,990.3, down 65.3 points on the day, and 19.2 per cent lower than its all-time high of 6,179 reached on 20 July.

The market slide came as Mr Blair, in a speech to the New York Stock Exchange, stressed the need for an overhaul of the World Bank and the IMF, and said the international community should aim to complete the reformswithin a year. He called for greater transparency both from governments and from international financial institutions.

Mr Blair said there was a need to recognise the degree of interdependence between economies, and said that the current crisis illustrated the weakness of the existing international financial system.

His comments came as the IMF, in its annual report on capital markets, warned that unless Japan acts to shore up its banking system and stimulate its economy, a new round of Asian devaluations could be on the cards. The IMF concluded that there were "significant risks and uncertainties" in international capital markets.

The IMF's view that the debt-ridden Japanese banking sector posed a major threat to the region's stability was underlined by yesterday's falls in Far Eastern equity markets.

On the Clinton videotapes, one analyst said: "The markets are looking for him [Clinton] to lose his composure. He hasn't yet and, so far, there's nothing new from the content of the testimony."

Wall Street followed a similar pattern to London. The Dow was down more than 180 points in early trade, but then made up the lost ground during the transmission of the tapes. The index finally regained all its losses, ending up 37.59 at 7,933.25.

In Hong Kong, the Hang Seng closed down 275.73 points at 7,170.23, while in Japan the Nikkei hit a 12-year-low of 13,597.30, down 385.82, after cracks began to appear in the compromise on banking reform hammered out by Japanese politicians on Friday.

After the Nikkei closed, Fitch IBCA, a leading credit rating agency, downgraded the Japanese long-term foreign currency rating from AAA to AA+, dealing a further blow to investor confidence about the country's economic prospects.

Marian Bell at the Royal Bank of Scotland said: "It's been a global financial fallout. There's been a credit downgrade for Japan, the apparent collapse of the banking deal and the Clinton tapes. I think we're looking at a global financial collapse and the lack of US leadership isn't helping."

In Frankfurt, the DAX Xetra closed down by almost 4 per cent at 4,439.13, and in Paris the CAC-40 finished the day down 3.5 per cent at 3,342.65. The Russian stock market closed down 4.6 per cent at 47.81, a record low, and currency trading was suspended after fragile market sentiment was dented further by the central bank's decision to print money. In Brazil, the Bovespa index closed down 3.9 per cent at 6,450.

Bonds were once again the main beneficiary of the turmoil in the equity markets. Liffe's December gilt future closed at 115.55, up 0.54.

Outlook, page 17

Hamish McRae, page 19

Leading article, Review page 3

PROMOTED VIDEO
News
people
Arts and Entertainment
Avatar grossed $2.8bn at the box office after its release in 2009
filmJames Cameron is excited
News
news

Lincoln MP Karl McCartney 'denied all knowledge' of the Twitter activity

Arts and Entertainment
Joel Edgerton, John Turturro and Christian Bale in Exodus: Gods and Kings
filmDirector said film would 'never have been financed' with ethnic minority actors in key roles
Arts and Entertainment
Stik on the crane as he completed the mural
art
Life and Style
View of champagne glasses at a beach bar set up along the Croisette during the 66th edition of the Cannes Film Festival in Cannes on May 17, 2013
food + drink(and for now, there's a clear winner)
News
The author PD James, who died on 27 November 2014
people

Detective novelist who wrote Death comes to Pemberley passed away peacefully at her home, aged 94

News
ebooksNow available in paperback
Arts and Entertainment
Jennifer Lawrence as Katniss Everdeen in The Hunger Games: Mockingjay Part 1
arts + ents
Life and Style
tech

Sites using the popular Gigya comment platform were attacked by the Syrian Electronic Army (SEA)

Extras
indybest
News
people
Arts and Entertainment
An unseen image of Kurt Cobain at home featured in the film 'Kurt Cobain: Montage of Heck'
film
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Argyll Scott International: 2x Service Desk Analyst

£20000 - £22000 per annum: Argyll Scott International: Service Desk Analyst Re...

Recruitment Genius: Senior Execution Trader

£30000 - £250000 per annum: Recruitment Genius: A global Rolling Spot FX, Comm...

Citifocus Ltd: ACA - Financial Reporting

£Attractive Package: Citifocus Ltd: Chartered accountant (ACA or CPA), must be...

Ampersand Consulting LLP: UI Designer/ User Interface Designer (UI, User Flow, Design)

£6000 - £60000 per annum + Bonus and Benefits: Ampersand Consulting LLP: UI De...

Day In a Page

Cameron, Miliband and Clegg join forces for Homeless Veterans campaign

Cameron, Miliband and Clegg join forces for Homeless Veterans campaign

It's in all our interests to look after servicemen and women who fall on hard times, say party leaders
Millionaire Sol Campbell wades into wealthy backlash against Labour's mansion tax

Sol Campbell cries foul at Labour's mansion tax

The former England defender joins Myleene Klass, Griff Rhys Jones and Melvyn Bragg in criticising proposals
Nicolas Sarkozy returns: The ex-President is preparing to fight for the leadership of France's main opposition party – but will he win big enough?

Sarkozy returns

The ex-President is preparing to fight for the leadership of France's main opposition party – but will he win big enough?
Is the criticism of Ed Miliband a coded form of anti-Semitism?

Is the criticism of Miliband anti-Semitic?

Attacks on the Labour leader have coalesced around a sense that he is different, weird, a man apart. But is the criticism more sinister?
Ouija boards are the must-have gift this Christmas, fuelled by a schlock horror film

Ouija boards are the must-have festive gift

Simon Usborne explores the appeal - and mysteries - of a century-old parlour game
There's a Good Girl exhibition: How female creatives are changing the way women are portrayed in advertising

In pictures: There's a Good Girl exhibition

The new exhibition reveals how female creatives are changing the way women are portrayed in advertising
UK firm Biscuiteers is giving cookies a makeover - from advent calendars to doll's houses

UK firm Biscuiteers is giving cookies a makeover

It worked with cupcakes, doughnuts and macarons so no wonder someone decided to revamp the humble biscuit
Can SkySaga capture the Minecraft magic?

Can SkySaga capture the Minecraft magic?

It's no surprise that the building game born in Sweden in 2009 and now played by millions, has imitators keen to construct their own mega money-spinner
The King's School is way ahead of the pack when it comes to using the latest classroom technology

Staying connected: The King's School

The school in Cambridgeshire is ahead of the pack when it comes to using the latest classroom technology. Richard Garner discovers how teachers and pupils stay connected
Christmas 2014: 23 best women's perfumes

Festively fragrant: the best women's perfumes

Give a loved one a luxe fragrance this year or treat yourself to a sensual pick-me-up
Arsenal vs Borussia Dortmund: Alex Oxlade-Chamberlain celebrates century with trademark display of speed and intuition

Arsenal vs Borussia Dortmund

The Ox celebrates century with trademark display of speed and intuition
Billy Joe Saunders vs Chris Eubank Jnr: When two worlds collide

When two worlds collide

Traveller Billy Joe Saunders did not have a pampered public-school upbringing - unlike Saturday’s opponent Chris Eubank Jnr
Homeless Veterans Christmas Appeal: Drifting and forgotten - turning lives around for ex-soldiers

Homeless Veterans Christmas Appeal: Turning lives around for ex-soldiers

Our partner charities help veterans on the brink – and get them back on their feet
Putin’s far-right ambition: Think-tank reveals how Russian President is wooing – and funding – populist parties across Europe to gain influence in the EU

Putin’s far-right ambition

Think-tank reveals how Russian President is wooing – and funding – populist parties across Europe to gain influence in the EU
Tove Jansson's Moominland: What was the inspiration for Finland's most famous family?

Escape to Moominland

What was the inspiration for Finland's most famous family?