City fears a Black Monday could follow Grey Friday; MARKET REPORT

It was not quite the biggest fall since the nightmarish 1987 crash. Even so, it was a panic stricken day as the stock market wondered whether the Government was about to disintegrate and fretted about the emotive language used by US banking chief Alan Greenspan.

At one time Footsie was down a staggering 168.5 points. It ended 88.2 lower at 3,963, wiping, Datastream calculated, more than pounds 20bn from company values. Footsie's worst post-crash fall was 103.4 points four years ago. The supporting 250 index, at one time down 116, ended off 87.7 at 4,348.1.

Selling was occasionally heavy. Many private investors, fearing the start of a collapse of confidence, locked in at least some of their profits.

Investment strategists, however, were inclined to be unfazed by it all, a necessary correction offering a buying opportunity, they felt.

Shares started the day in disarray on the Tory turmoil and Mr Greenspan's overnight talk of stock market's as a "collapsing financial asset bubble". His comments must mean, it was reasoned, that the US non-farm payroll figures would trigger interest rate increases. In the event the job figures were not as high as feared.

So New York's response was not so dramatic as expected. The feared slump was, during London opening, 143 points at its worst, a far cry from the talk of a 500 crash.

Footsie's rally from the depths, a recovery of 80.2, is unlikely to be carried through on Monday. Indeed, there are fears Grey Friday could be followed by Black Monday. The general view is that shares will open lower with suggestions of a snap new year election and the suspicion another interest rate increase is near drowning any enthusiasm.

Even so, ever the optimist, the market remains hopeful the present upheaval will be a relatively brief aberration and it will still experience a Christmas rally - but possibly from a rather lower base than seemed likely a few weeks ago.

Government stocks took a hammering. At one time they were down more than pounds 2. A late rally cut falls to nearer pounds 15/8.

In turnover terms it was a profitable day for the market with trading topping 700 million. And Tradepoint, the fledgling rival to the market, had its best day with deals worth pounds 12m against the previous record of pounds 9,5m.

There is no doubt the upset has frightened many of the less experienced takeover players. Some stockbrokers were fretting about punters who have long term T-25 trades. "There could, if shares continue to wilt, be a run of defaulters," bemoaned one private client broker.

Only one Footsie constituent managed to advance. BTR, for long in the doghouse, gained 7p to 237.5p as it long-awaited trading statement turned out to be more encouraging than expected.

On any other day the shares would have enjoyed a heady double-digit advance.

Rolls-Royce, the aero engineer group, was the biggest Footsie faller, dropping 12.5p to 238p. Some of the takeover candidates were hard hit; Standard Chartered, the banking group, retreated 33.5p to 663.5p; GRE 11.5p to 263p and Prudential Corporation 19.5p to 481p.

Zeneca, at one time down 70p, ended 49.5p off at 1,581.5p. House of Fraser fell 10.5p to 161p.

Analyst comments were largely lost in the resounding crash. ABN Amro Hoare Govett produced a 950p target price for BOC, the chemical group, but watched the price fall 16.5p to 897p.

Merrill Lynch downgraded profit expectations at Booker, the food group, helping the shares 11.5p lower to 402.5p.

Even a spark of takeover action failed to create much inspiration. Northern Electric gained just 1p to 602.5p as bidder CE Electric, the US utility, raised its offer to 650p. The Americans have 29.9 per cent of Northern. Whitehall is expected to pronounce on the bid later this month.

Widney, the specialist engineer, added 2p to 62p as SEP Industrial declared a 5.46 per cent stake. A profit warning last month pushed the shares, 128.25p a year ago, to 42.5p. Widney is ditching most of its brewing equipment side in an effort to improve its performance. SEP, a bolts and screws group, ended little changed at 50p.

Snakeboard, the leisure group, held at 3.75p after placing 2 million shares at 3p.

Haemocell, the struggling healthcare group, slumped 4p to 9p; it produced losses of pounds 1.2m and plans to raise pounds 2m through a placing and open offer at 3p.