London shares slump is worst for 21 years

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London's blue chip shares today slumped almost 9 per cent to cap their worst week since 'Black Monday' in 1987.

The FTSE 100 index closed 8.85 per cent down on the day, down 381.7 at 3932.1, the index's lowest level since May 2003, meaning that more than £250bn has been wiped off the the market values of Britain's biggest firms

Black Friday in London came after Japan's benchmark Nikkei 225 index shed more than 10 per cent.

And this afternoon in New York the Dow Jones Industrial Average, which yesterday closed below 9000 for the first time since 2003, swung sharply on opening today - falling more than 600 points in the first few minutes of trading but easing back to a 335 point fall to 8243 at around 5pm London time.

London's share falls today follow FTSE 100 plunges of 8 per cent on Monday, 5 per cent on Tuesday and 1 per cent yesterday - and means the index has dived a 21 per cent this week alone.

Today's bloodbath came amid mounting fears over a deep economic downturn and further uncertainty for the battered banking sector. More heavy falls for New York's Dow Jones Industrial Average following yesterday's 7.3 per cent slump also aggravated the trading woes in London.

Banks dominated the Footsie's numerous fallers amid few signs that the Government's huge bail-out announced on Wednesday was having any impact.

Royal Bank of Scotland plunged 25 per cent, or 24.3p to 71.7p, with Halifax Bank of Scotland not far behind, down 19 per cent, or 29.3p to 124.2p.

Barclays was 14 per cent lower, or 34.25p to 207.5p as it said it was considering a number of capital raising options in light of the UK government's £25 billion industry-wide recapitalisation offer.

A number of other financial stocks were lower amid the recession fears.

Insurance and savings giants Legal & General and Prudential were big casualties amid fears for the sector's solvency position. The shares were off 14.3p to 74.7p and 44.25p to 378.25p respectively.

Car insurance group Admiral was among the fallers, despite reporting strong trading for the quarter to the end of September. Shares were down 2 per cent or 19.5p to 880p, with analysts noting continued pressure on margins and growth at the company's comparison website.

Meanwhile, the prospect of weaker economic growth meant miners were under heavy selling pressure, with Rio Tinto down 326p at 2424p and Xstrata off 164p at 1223p. Among other heavy fallers, BT Group slid 17.2p to 136.1p.

Retailers were also joining the slide, with Marks & Spencer down 8.75p to 218p, fashion chain Next 37.5p lower at 947.5p and B&Q owner Kingfisher 9.5p cheaper at 120.1p.

Even with oil prices falling towards the 80 dollar a mark, fuel-hungry British Airways was a big loser, down 12 per cent or 15.1p to 109.9p as investors fretted over the company's trading outlook.

Just one blue chip was in positive territory, media group Thomson Reuters which edged up 1p to 1101p.

The picture was a bit better in the FTSE 250 Index, with heavily-sold broadcaster ITV adding 1.5p to 37.5p amid speculation the current woes could lead to mergers within the industry.

Britain's biggest pub chain Punch Taverns also added 0.25p to 161.25p after rumours that the collapse of Icelandic Kaupthing had removed a short-seller from the market. But housebuilder Barratt Developments was among the firms in the red, down 8.5p to 83.25p.

The Footsie's sole riser was Thomson Reuters, up 1p to 1101p.

The four biggest fallers were Schroders, down 229 to 680p, Royal Bank of Scotland down 24.3p to 71.7p, HBOS down 29.3p to 124.2p and 3i Group, which closed down 97p at 500.5p.