FTSE 100 closes after turbulent week

Britain's leading shares index brought a turbulent week to a close today as world leaders failed to ease global recession fears.

The FTSE 100 Index lost 5.6% or £78 billion from its value this week, which is the second worst weekly fall this year, despite a last-minute push which saw it close 0.5% higher on the day.

A gloomy outlook from America's central bank, weak Chinese and eurozone economic data and the enduring sovereign debt crisis battered investors' confidence throughout the week.

The FTSE 100, which features companies including Tesco, Marks & Spencer and BP, closed 4.7% lower yesterday, its biggest percentage fall since March 2009.

The dismal week closed as leaders from the world's wealthiest nations pledged to take action to help calm the markets.

A joint statement from the Group of 20 nations said: "We are taking strong actions to maintain financial stability, restore confidence and support growth. We commit to take all actions to preserve the stability of banking systems and financial markets as required."

Elsewhere in Washington, Chancellor George Osborne warned time was running out to tackle the eurozone debt crisis.

He said: "There is a far greater sense of urgency than there was three weeks ago about the necessity for the eurozone to address its problems and there is pressure on the eurozone from across the international community."

But analysts said the London market's lacklustre finish reflected a lack of confidence in political leadership.

David Jones, chief market strategist at IG Index, said: "Markets have been tired of continual talk over drawing a line under the crisis, but very little in the way of action.

"The last couple of days have had a very similar feeling of panic as that experienced in August - it would be a relief all around if there was some calm when trading resumes next week, but very few seem willing to bet on that at the moment."

Prime Minister David Cameron warned last night that the world's wealthiest nations were close to "staring down the barrel" and called for the political will to do what is necessary to fix broken balance sheets.

Mr Cameron earlier joined forces with the leaders of five other G20 countries to call for decisive and co-ordinated action to help the global economy recover from recession.

The six nations signed an open letter to French and current G20 president Nicolas Sarkozy, urging eurozone countries to act swiftly to resolve the crisis in the region, where Greece remains teetering on the brink of a debt default.

The letter said the global economy needed a swift solution to the euro crisis, while it also called for countries with trade surpluses to boost domestic demand and a global deal to remove trade barriers.

It followed grim warnings about the health of the global economy from the heads of the World Bank and the International Monetary Fund.

Robert Zoellick, president of the World Bank, said the global economy is in a "danger zone".

Global markets had surged in previous days on hopes that the Fed might embark on a third package of quantitative easing, but Operation Twist, designed to keep US interest rates lower for longer, was met with worldwide disappointment.

Poor manufacturing data from China and the eurozone added to the unease and sparked a widespread sell-off of mining stocks on concerns demand for metals may suffer if China and the US stop growing or turn down.

The US Federal Reserve also warned of "significant" risks to the world's biggest economy.

Metal and oil prices continued to slide, with copper dropping nearly 5% to 331.15 US dollars a pound and Brent crude in London falling 0.5% to 104.93 US dollars a barrel.

The heavily weighted mining sector was again hit by the falling prices and fears over dwindling demand as Fresnillo lost 4%, Kazakhmys fell 4% and Xstrata dropped 3%.

There was some respite for battered banking stocks which fell early in trading after ratings agency Moody's downgraded eight Greek banks due to their exposure to the country's debt and the deteriorating economy.

The sector was lifted by rumours that the European Financial Stability Facility - the bailout fund - was set for a boost. Barclays and Lloyds Banking Group topped the market, adding 5% apiece, while Royal Bank of Scotland advanced nearly 4%.

PA