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

Start your day with The Independent, sign up for daily news emails
Arts and Entertainment
The Doctor and Clara have their first real heart to heart since he regenerated in 'Deep Breath'
TV
Life and Style
Apple showed no sign of losing its talent for product launches with the new, slightly larger iPhone 6 making headlines
techSecurity breaches and overhyped start-ups dominated a year in which very little changed (save the size of your phone)
Arts and Entertainment
Jamie Oliver
filmTV chef Jamie Oliver turned down role in The Hobbit
News
The official police photograph of Dustin Diamond taken after he was arrested in Wisconsin
peopleDownfall of the TV star charged with bar stabbing
PROMOTED VIDEO
Arts and Entertainment
Jeremy Clarkson, left, and Richard Hammond upset the locals in South America
tvReview: Top Gear team flee Patagonia as Christmas special reaches its climax in the style of Butch and Sundance
News
people
Sport
Ashley Barnes of Burnley scores their second goal
footballMan City vs Burnley match report
Arts and Entertainment
Peter Mayhew as Chewbacca alongside Harrison Ford's Han Solo in 'Star Wars'
film
News
i100
Arts and Entertainment
Man of action: Christian Bale stars in Exodus: Gods and Kings
film
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
Arts and Entertainment
Tracy Emin's 1998 piece 'My Bed' on display at Christie's
artOne expert claims she did not
Arts and Entertainment
Catherine (Sarah Lancashire) in Happy Valley ((C) Red Productions/Ben Blackall)
TV
News
Hackers revealed Oscar-winning actress Lawrence was paid less than her male co-stars in American Hustle
people
Arts and Entertainment
Clueless? Locked-door mysteries are the ultimate manifestation of the cerebral detective story
booksAs a new collection of the genre’s best is published, its editor explains the rules of engagement
Sport
Robin van Persie is blocked by Hugo Lloris
footballTottenham vs Manchester United match report
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

Selby Jennings: VP/SVP Credit Quant- NY- Investment Bank

Not specified: Selby Jennings: VP/SVP Credit Quant Top tier investment bank i...

Selby Jennings: Quantitative Research | Equity | New York

Not specified: Selby Jennings: Quantitative Research | Global Equity | New Yor...

Selby Jennings: SVP Model Validation

Not specified: Selby Jennings: SVP Model Validation This top tiered investment...

Selby Jennings: Oil Operations

Highly Competitive: Selby Jennings: Our client, a leading European Oil trading...

Day In a Page

A timely reminder of the bloody anniversary we all forgot

A timely reminder of the bloody anniversary we all forgot

Who remembers that this week we enter the 150th anniversary year of the end of the American Civil War, asks Robert Fisk
Homeless Veterans appeal: Former soldiers pay their respects to a friend who also served

Homeless Veterans appeal

Former soldiers pay their respects to a friend who also served
Downfall of Dustin 'Screech' Diamond, the 'Saved By The Bell' star charged with bar stabbing

Scarred by the bell

The downfall of the TV star charged with bar stabbing
Why 2014 was a year of technological let-downs

Why 2014 was a year of technological let-downs

Security breaches and overhyped start-ups dominated a year in which very little changed (save the size of your phone)
Cuba's golf revolution: But will the revolutionary nation take 'bourgeois' game to its heart?

Will revolutionary Cuba take 'bourgeois' golf to its heart?

Fidel Castro ridiculed the game – but now investment in leisure resort projects is welcome
The Locked Room Mysteries: As a new collection of the genre’s best is published, its editor Otto Penzler explains the rules of engagement

The Locked Room Mysteries

As a new collection of the genre’s best is published, its editor explains the rules of engagement
Amy Adams on playing painter Margaret Keane in Tim Burton's Big Eyes

How I made myself Keane

Amy Adams hadn’t wanted to take the role of artist Margaret Keane, because she’d had enough of playing victims. But then she had a daughter, and saw the painter in a new light
Ed Richards: Parting view of Ofcom chief. . . we hate jokes on the disabled

Parting view of Ofcom chief... we hate jokes on the disabled

Bad language once got TV viewers irate, inciting calls to broadcasting switchboards. But now there is a worse offender, says retiring head of the media watchdog, Ed Richards
A look back at fashion in 2014: Wear in review

Wear in review

A look back at fashion in 2014
Ian Herbert: My 10 hopes for sport in 2015. Might just one of them happen?

Ian Herbert: My 10 hopes for sport in 2015

Might just one of them happen?
War with Isis: The West needs more than a White Knight

The West needs more than a White Knight

Despite billions spent on weapons, the US has not been able to counter Isis's gruesome tactics, says Patrick Cockburn
Return to Helmand: Private Davey Graham recalls the day he was shot by the Taliban

'The day I was shot by the Taliban'

Private Davey Graham was shot five times during an ambush in 2007 - it was the first, controversial photograph to show the dangers our soldiers faced in Helmand province
Revealed: the best and worst airlines for delays

Revealed: the best and worst airlines for delays

Many flyers are failing to claim compensation to which they are entitled, a new survey has found
The stories that defined 2014: From the Scottish independence referendum to the Ice Bucket Challenge, our writers voice their opinions

The stories that defined 2014

From the Scottish independence referendum to the Ice Bucket Challenge, our writers voice their opinions
Stoke-on-Trent becomes first British city to be classified as 'disaster resilient' by the United Nations

Disaster looming? Now you know where to head...

Which British city has become the first to be awarded special 'resilience' status by the UN?