Dow drops sharply

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The Independent Online
Wall Street fell almost 24points last night below the important 4,000 level as dealers took on board the potential of the Barings crisis.

But the fireworks expected around the world's financial markets in the wake of the Barings collapse fizzled out in a damp squib. Equities in London shrugged off the crisis as an isolated incident - in the currency markets the recent drift to the safety of the deutschmark accelerated but hardly constituted a rout of sterling or the dollar.

Bob Semple, equity strategist at NatWest Securities, said Barings' problems were not enormously significant in the great scheme of things.

Another analyst said the steady recovery of the stock market since it opened 39.5 points down at 2998.2 reflected the feeling that an already depressed market was now good value. After a day of quiet trading the market closed 12.4 down at 3025.3.

Merchant banks were predictably hardest hit with Kleinwort Benson closing 42p lower at 578p, Warburg off 35p at 683p and Schroders 23p lower at 1490p. The pound took the brunt of the selling pressure, but fared no worse than other currencies against the deutschmark. The pound fell three pfennigs to DM2.30.