Stocks take another hammering
Friday 05 August 2011
London's blue chip share index took another hammering today, capping a calamitous week that has seen nearly 10% wiped from its value.
The FTSE 100 Index fell 146.2 points, or 2.7%, to 5247 today amid continued panic that America will lead the global economy back into recession and the eurozone will be crushed under the weight of its debts.
London's top flight share index nearly moved into positive territory at one point after a key report showed 117,000 jobs were created in the US last month, an increase on the past two months.
But the bounce lasted less than an hour, as the index fell further into the red in a volatile day of trading amid rumours that the US could lose its cherished AAA credit rating. In America, the Dow Jones also lost nearly 1% of its value in early trading.
Another dire day of trading means the FTSE 100 Index has ended the week down 9.8%, which has slashed £147.9 billion from its value.
The top flight registered its biggest fall of the year yesterday - battering pensions and savings funds in the process - while New York's Dow Jones Industrial Average plunged 4.3% as Wall Street suffered its worst day for nearly three years.
The panic spread to Asia where Japan's Nikkei 225 and Hong Kong's Hang Seng dropped 4% overnight.
There are rising fears that Italy and Spain, the eurozone's third and fourth largest economies, could default on their debt repayments and require EU-funded bailouts.
Worries are also mounting over the strength of the US economy following a raft of gloomy data, suggesting its recovery is running out of steam.
Louise Cooper, an analyst at BGC Partners, said traders are "starting to feel the fear".
She added: "The banking industry is yet again facing a crisis - we are not yet at the post-Lehman days, but the system is creaking loudly.
"The horrible reality is that those leaders in charge of our economy have no answers."
Investors have been switching their cash from risky assets, such as shares, to safe havens like gold, which recently hit fresh highs.
Royal Bank of Scotland saw its shares drop 7% after it published half-year results revealing a £794 million loss.
Meanwhile, Foreign Secretary William Hague said the Government was "fully functioning" despite the Prime Minister, his deputy and the chancellor all being on holiday as stock markets plunge around the globe.
David Cameron spoke by telephone earlier today with Bank of England governor Mervyn King - who is also due to speak with Chancellor George Osborne later. Mr Hague is due to hold a meeting with senior officials from the Treasury, Downing Street and the Foreign Office.
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