London shares slide to eight-month low

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The Independent Online

The London stock market slumped to an eight-month low yesterday as growing concerns over the fragility of the corporate recovery wiped billions of pounds off shares.

The London stock market slumped to an eight-month low yesterday as growing concerns over the fragility of the corporate recovery wiped billions of pounds off shares.

The FTSE 100 fell 71 points, or 1.6 per cent, to 4306.3, its lowest closing level since November last year.

The fall was sparked by a tumble on Wall Street, which fell below the 10,000 mark as the London market was closing, although a late flurry of bargain hunters helped the US benchmark end at 10,050, up just 4 points last night.

Hilary Cook, the director of Barclays Private Clients, said: "It was very disappointing, especially after yesterday when we finally saw the trading screens turn blue."

Traders on Wall Street have been spooked by fears that corporate profits, especially in telecom and IT companies, will fail to meet expectations.

"Everybody wants to hear that the second half of the year is going to be wonderful but it just doesn't seem to be turning out that way," Ms Cook said.

Oil prices have also been climbing recently, refuelling investors' fears about the possible impact on consumer and corporate spending. US crude futures rose 78 cent to $41.36 a barrel yesterday amid concern over stocks and the threat of bankruptcy at the Russian oil giant Yukos.

Markets on both sides of the Atlantic were also hit by hawkish comments by Alan Greenspan, the chairman of the US Federal Reserve, that were seen as pointing to faster rises in interest rates than analysts had expected.

London shares were also dragged down by an absence of buyers as the market began its traditional summer session that typically sees high levels of volatility.

"I see the markets being very volatile between now and the end of the year," said Tom Hougaard, the chief market strategist at the financial bookmakers City Index.

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