Carnage hits London shares

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The Independent Online

Share prices, led by falling technology stocks, dropped sharply on the London Stock Exchange in early trading Monday, following falls in Wall Street on Friday.

Within the first half hour of trading, the Financial Times-Stock Exchange 100-Share Index of blue chip stocks dropped 246.7 points, or 4 percent, from Friday's close, falling through the 6,000-point barrier to 5,931.4.

At 9:00 a.m., the FTSE-100 steadied to 5,931.3 points, down 216.8 from Friday's close.

The Techmark 100 index of technology stocks was down 164.7 points in the first few minutes of trade, and fell soon after by 346.7 points to stand at 3,181.40, a loss of 6.9 percent from Friday.

The fall came as investors questioned the future of loss-making high technology and internet companies.

"We have a situation of controlled panic, I think," said Jeremy Batstone, an analyst at NatWest stockbrokers in London.

"This really was an accident waiting to happen," he added of the falls in hi-tech companies

For analysts and investors the big question was whether the falls were the market adjusting to overheated prices of hi-tech shares, or the start of a crash similar to that of October 1987 when Wall Street plunged and the FT-SE 100 index fell 20 percent in a single day.

"This is about where we expected to be," said Tom Sheridan, an analyst at Barclays Bank, predicting that the falls marked the end of easy money made on huge rises in hi-tech shares. "Gravity eventually does work," added Sheridan.

Traders reported thin volume of sales as analysts battled to interpret how Wall Street would fare later in the day.

"We're not quite down by the 300 or 400 points some were looking for, but it's still early days, said James Dewhurst, equity salesman at stockbroker CCF Charterhouse.

In Tokyo, stocks closed sharply down Monday, although finance officials predicted Japan's economy would be largely unscathed.

The benchmark 225-issue Nikkei Stock Average lost 1,426.04 points, or 6.98 percent, to close at 19,008.64. On Friday, the average closed down 91.74 points, or 0.45 percent.

In a rare move, Britain's biggest selling tabloid, The Sun, devoted its front-page to the stock markets, instead of the more usual sex or soccer scandals.