Shares plunge as jobs gloom deepens

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The Independent Online
SHARES ON the London stock market hit a six-month low yesterday, amid growing pessimism about the outlook for the British economy.

The FTSE-100 index fell by 92.8 points yesterday, coinciding with a raft of gloomy business surveys as well as news of yet more job losses in north- east England. The latest fall in UK shares, means they are now trading almost 10 per cent lower than the record highs seen earlier this summer,

An increasing number of City money managers are bailing out of the UK stock market, according to a new study, while a separate survey of UK retailers found that July was another disappointing month for retail sales.

The fall was compounded by further gloomy news from the industrial sector as, Grove Worldwide, a US crane maker, became the latest manufacturer to cut jobs in an attempt to improve its finances. The crane maker is to close its plant in Sunderland with the loss of 670 jobs. Recently, Rover, the car maker, said it was cutting 1,500 jobs, and Siemens, the electronics giant, announced the closure of its Tyneside plant, where 1,100 jobs are expected to go.

Worries about the Asian crisis lie behind the latest round of jitters in the European stock markets, experts said yesterday. The UK's FTSE 100 index of leading shares closed at 5587.6 - 1.6 per cent down on the day - after many Asian stock markets registered heavy losses overnight. The British stock market has had a roller-coaster ride over the last week amid concerns about the deteriorating situation in Far East, the slowdown in the UK and the presidential crisis in the US.

A survey of UK money managers released yesterday underlined the ongoing concerns about over-valued share prices. The Merrill Lynch/Gallup survey found that more and more money managers have turned sellers of UK shares and property, preferring instead to invest in government bonds. Only 3 per cent of the managers, who look after the money invested in UK pension funds, believe the economy will improve next year.

Trevor Greetham, global strategist at Merrill Lynch, said: "Fund managers are bracing themselves for a possible recession."