Nearly £100billion was wiped off the value of top companies last week - the worst for the stock market since the dotcom bubble burst six years ago. 

The FTSE100 slumped by £94.4billion after dire warnings of a recession triggered the massive share sell-off.

Yesterday alone companies saw their value drop by nearly £29billion in a 121.4 point slide that capped a terrible week for Gordon Brown.

The FTSE 100 has dropped seven per cent this week after two months of revival

The fall in share prices left the Prime Minister's economic relaunch looking distinctly hollow in the wake of Alistair Darling's warning that conditions are the worst in 60 years.

It suggested the City is unconvinced by Mr Brown's claim on Thursday night that he is 'cautiously optimistic' about Britain's prospects.

Wave after wave of depressing economic news has engulfed stock markets on both sides of the Atlantic in recent days, pushing down share values.

The FTSE started the week at 5,636.6 but has lost 395.9 points over the last five trading days to close the week seven per cent lower at 5,240.7.

The prognosis for the global economy got even worse yesterday when the U.S. revealed unemployment hit its highest level in nearly five years.

The U.S. Labor Department said a higher-than-expected 84,000 jobs were lost last month. Economists were expecting a loss of 75,000.

The American jobless rate has now risen to 6.1 per cent, its highest level since December 2003. To make matters worse, the department revised the job loss figures upwards for each of the past two months.

The data spooked global stock markets because it increased fears that the world's biggest and most influential economy may not be able to fight off recession.

On the London Stock Exchange, banking stocks were among the biggest losers following comments from the European Central Bank president Jean-Claude Trichet. He cast doubt upon the ability of the sector to weather the slowdown.

Keith Bowman, an analyst at Hargreaves Lansdown Stockbrokers, said: 'Banks are still responding to the negative comments from the ECB.'

Royal Bank of Scotland, Halifax Bank of Scotland, and Bradford & Bingley have all had to ask investors to bail them out with emergency fundraisers in recent months.

The shares of financial companies have been particularly badly hit since the onset of the credit crunch last August.

The collapse of the sub-prime mortgage market in the U.S. left many banks nursing large losses as customers with poor credit histories began to default on their repayments.

This forced banks to stop lending to each other, and resulted in them charging homebuyers and owners a lot more for mortgages.

Mining stocks, which are a large constituent of the FTSE, have also taken a hit. Prices of metals have fallen on fears of weaker demand from big importers such as China.

The gloom in London was reflected around the world. Exchanges in Paris, Frankfurt, Japan, Hong Kong, Australia and India fell by two per cent or more. In the U.S., Wall Street slipped more than one per cent in the first few hours of trading.