FTSE plunges to a two-and-a-half year low as Bradford & Bingley shares tumble

The FTSE index of Britain's 100 biggest firms closed yesterday at its lowest level for two and a half years.

In a blow to investors, the FTSE 100 closed down just over 1 per cent at 5,412.8, the worst since November 2005.

The index is about 1,300 points lower than its peak over the last year of 6,730.
The fall is a blow for people who have invested their savings in the stock market.

It will also raise fears among those considering investing in stocks and shares that prices may fall even further.

The blue-chip index is still not in a 'bear market', which is when shares fall by 20 per cent in two months. But experts say it could be within weeks if the flow of negative company news continues.

The American Dow Jones is already in bear territory, having fallen 21 per cent on Wednesday from its peak. Outsidethe FTSE 100, the biggest loser was Bradford & Bingley, whose shares plunged 18 per cent yesterday.

Nearly £70million was wiped off the value of the bank after its shares closed yesterday at an all-time low of just 50p.

The news is a huge blow for its 850,000 small shareholders, whose share where worth nearly £4.50 last year.

The ex-building society's shares were hit after U.S. private equity group Texas Pacific pulled out of a deal to inject £179million into the bank.

Texas Pacific changed its mind after the bank's credit rating was cut on Thursday.