Wednesday 22 October - afternoon update

Shares were being sold off across the board today, but the London Stock Exchange itself was one of the blue-chip index's biggest casualties.

News that London-based clearing house LCH.Clearnet had been bought by its US counterpart, the Depository Trust & Clearing Corporation, may have Clearnet's owners cracking open the champagne after pocketing a €739 million (£580 million) windfall, but it adds to the LSE's woes.

The DTCC will soon be able to give clearing services to all US trading venues wanting to trade UK stocks. Broker MF Global warns this means even more players will be keen to enter the equity trading game, eating away at the LSE's market share. Its dominance is already under threat: in September, its share of trading in top stocks fell to about 60%, a 10% drop since January.

The ban on short-selling, and investors shunning the troubled markets, have also hit daily turnover. LSE shares today dived to a three-year low, off 71½p at 514p, a far cry from the near-£20 at the start of the year.

The FTSE 100 plummeted again after Gordon Brown and Bank of England Governor Mervyn King admitted the UK is facing recession. The index dived 191.45 points, or 4.5%, to 4038.28 as mega-losses from the miners dragged down the index. In New York, the Dow slumped 362.32 to 8671.34 after a miserable set of earnings figures from some of the biggest US companies. Traders said investors had simply lost heart, with one questioning why anyone would buy anything now, given that prices are likely to look similar midway through 2009.

King may finally have mentioned the “R” word, but no one seems to have told City analysts. In a typically blunt note from Société Générale's James Montier in which he quoted Pink Floyd's Comfortably Numb, asking “Is there anyone home?”, the strategist said that while pretty much everyone else is braced for recession, analysts are still predicting strong earnings growth.

“So far this year, I have accused analysts of being bunnies in the headlights, and asleep at the wheel. I am running out of metaphors,” he said. “Analysts seem to remain firmly in cloud cuckoo land.” Montier notes that many are dismissing these forecasts as pipedreams, but when companies miss them, the response is a heavy sell-off in their shares.

News the short-selling ban on most financial stocks will not be lifted soon was not enough to aid Royal Bank of Scotland. The bank lost 8.4p to 70.9p after a negative broker note.

Broadcaster ITV remained in the doldrums, sinking to a fresh low, down 2¾p at 30½p. Initiating coverage of the group with an underperform rating and a 30p target, Jefferies International warns that its pension deficit remains a threat to shareholder distributions.

The price of black gold may have plummeted in recent days but the oil sector still has its fans. Ahead of Opec's emergency meeting on Friday, Dresdner Kleinwort believes there are buys to be had among the majors despite the price of oil halving since July.

Expectation is that the cartel, which controls 40% of the world's supply, will be able to keep the cost above $80 a barrel through cutting production by a million barrels a day. But the broker believes dividends will be secure even if the price falls as low as $50 a barrel.

Dresdner's upgrades and upbeat forecasts were not enough to compensate for investors' concerns over the impact of falling prices, however.

BG Group, boosted yesterday by talk of possible interest from US giant Exxon Mobil, sank 36p to 778p. The broker is also advising clients to stock up on the titans of the sector, BP and Royal Dutch Shell.

But BP plunged 25p to 443½p despite being Dresdner's top pick, while Royal Dutch Shell's A shares plunged 76p to 1461p, and the B shares were off 70p at 1416p.