| Black Monday as biggest FTSE crash since 9/11 wipes off nearly £60bn in shares
Last updated at 16:22pm on 21.01.08
Traders at the London Stock Exchange have seen the FTSE drop since the beginning of January
The stock market was in meltdown today as nearly £60billion was wiped off London shares.
A combination of poor economic figures and the worsening global credit crunch sent the FTSE 100 plunging.
At one stage the drop was the biggest since 9/11 in 2001, although the index of Britain's biggest companies later clawed back some of the losses. At lunchtime the Footsie was down 250.1 points to 5647.8.
That means the FTSE 100 has now fallen by around 10 per cent in the last 10 days, by around 15 per cent over the last month and is well on the way to being off 20 per cent since its most recent high of 6754 in July - before the world's banking system was sent spiralling.
It is also the worst start to the year for the stock market since records began in 1936. "I smell the acrid stench of fear and uncertainty," said markets commentator David Buik of BGC Partners. European markets also tumbled.
The fall in the Footsie came after figures revealed a record government borrowing deficit for December of £7.8billion.
Howard Archer of forecasters Global Insight said: "The Chancellor's target of cutting public sector borrowing next fiscal year now looks like wishful thinking."
Big fallers included Wolseley, the building supplies company, which reported a 40 per cent drop in profits.
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It came as Asian markets fell overnight after leading shares on Wall Street's Dow Jones Industrial Average slipped into the red on Friday.
Investors were left unimpressed by the US government's tax-relief plans to stimulate the economy.
The Footsie is now down 10.5 per cent on the opening mark of 6456.9 this year - the worst opening since records began in 1936.
The grim economic outlook comes as Gordon Brown has announced a rescue plan for the ailing Northern Rock.
The Treasury aims to sell millions of Government-backed bonds which will effectively prop up the bank, a move which is likely to make it more attractive to private investors.
The news sent shares in the stricken bank soaring this morning.
Mark Outten, senior trader at GFT Global Markets, said: "There is a general nervousness in the markets at the moment over an economic slowdown."
Last week, the index dipped below the 6,000 barrier for the first time since the start of the credit crunch in August.
Earlier this morning, the Footsie was almost 170 points lower, touching levels not seen since August 2006.
Just a handful of shares were in positive territory, including Friends Provident, which was buoyed by talk of a bid for the life assurer.
Markets also fell in Europe, with the CAC-40 in Paris down more than 3 per cent and the Dax in Frankfurt down almost 3 per cent as they digested the news from across the Atlantic.
On Friday, President George Bush unveiled plans for a special package of measures worth billions of dollars to help avoid a downturn in the US economy.
He said the growth package would have to be big enough to make a difference to the "large and dynamic" US economy.
But US shares turned sharply lower following the announcement, with some market participants saying that Mr Bush's plan did not go far enough.
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