Markets slump further after enduring a week to forget

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The FTSE 100 index crashed below 4000 — down 107.88 to a three-month low of 3910.49 — as City trading screens flashed red. It marked the end of a dismal week for the London market and left the blue-chip index down 16% so far this year.

The sell-off was mirrored across Europe today with the Dax down 4% in Frankfurt and the Cac off 3% in Paris. On Wall Street, the Dow Jones Industrial Average was also on the slide, having hit a six-year low of 7465.95 last night.

Mike Lenhoff, chief strategist at Brewin Dolphin Securities in London, said sentiment was "staggeringly bad" and only six blue-chip stocks were in positive territory in London. Leading the fallers were mining stocks following disappointing results from Anglo American and falling demand for metals as recession bites.

The price of gold moved ever higher towards $1000 an ounce as investors deserted equities and piled cash into safe havens. Spot gold prices in London jumped to $992.30 an ounce, the highest in 10 months. Gold is trading less than 4% below its all-time high of $1,080.30 an ounce set last March. Investor confidence has been shattered by the banking crisis and the seemingly never-ending flow of gloomy news on the economy.

Figures published today showing a sharp rise in home repossessions and a dramatic fall in car production far outweighed the pleasantly surprising rise in High Street sales last month.

Joshua Raymond, market strategist at City Index, said: "The markets have endured a week to forget. The falls we are seeing are shattering any positivity, and this is hampering investors' ability to bargain-hunt. Equities are dying and an adrenaline shot is needed to bring them back to life. However, the Bank of England and Government measures have so far failed to provide this."