American recession fears as shares slump
More tan £36bn was wiped off the value of British shares yesterday as fears of a "double dip" recession in the United States rattled the fragile market.
The FTSE 100 index of blue-chip companies ended the day nearly 4 per cent, or 152 points, lower and at one stage crashed through the psychologically important 4,000 barrier.
Dealers said the slide had been prompted by persistent economic uncertainty in America and the prospect of Britain joining an attack on Iraq. Fund managers and equity strategists said the rally that had seen the FTSE100 rise by almost a fifth in August appeared to be over.
In New York, the Dow Jones Industrial Average fell by more than 350 points. "The US market is setting the agenda and Europe is slavishly following," said John Hatherley of the UK fund managers M&G. "All the indications are that the US economy is slowing down. The question is whether there is enough ammunition to push the markets into a new bear phase."
The fall in share prices threatens to force a number of household names, including British Airways, out of the FTSE 100.
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