FTSE fall wipes £77bn off shares

THE London stockmarket was in freefall today plumetting 5.5 per cent - the biggest fall since 9/11 terror attacks.

The FTSE 100 Index tumbled to 5578 points as fears over the health of the world's biggest economy swept through markets across the globe.

Although traders' nerves steadied later to recoup the worst of the losses, the Footsie was still down by more than three per cent, or 186.2 points, to 5715.5 by mid session.

The fall came as Asian markets tumbled overnight following losses for the Dow Jones Industrial Average on Friday, when investors were left unimpressed by the US Government's tax-relief plans to spur on the economy.

Heavily-weighted banking and mining stocks dragged the Footsie lower as concerns over a slowdown gathered pace. HSBC and Royal Bank of Scotland - both with heavy exposure to the US economy - each saw shares lose four per cent, falling 30.5p to 730p and 13.75p to 359.25p respectively.

Rumours

Miners also lost out after a rumoured fresh offer from BHP Billiton for Rio Tinto failed to materialise. Bid target Rio fell 310p to 4390p, while BHP slipped 81p to 1297p.

Peers Vedanta Resources and Anglo American - off 71p to 1661p and 113p to 2478p respectively - also suffered as concerns over faltering global growth weighed on the sector.

Plumbing and heating giant Wolseley was among the early Footsie fallers, losing almost nine per cent after the company warned of a deteriorating US housing market and falling profits. But the firm recovered the setback as the session wore on to stand just 16p lower at 700p.

Insurer Standard Life meanwhile was on the back foot amid reports that Trevor Matthews, its head of UK life and pensions, was being lined up as the new chief executive of Friends Provident, currently a bid target for a US private equity firm.

While it is thought that Mr Matthews turned down the job last week, shares in Standard Life still slipped 8.25p to 203.5p.

Insurer Friends Provident was one of a handful of firms in positive territory after JC Flowers said it was eyeing a reported £4.1 billion takeover. This pushed shares up almost seven per cent, or 10.3p, to 162.8p.

In the second tier, Northern Rock led the risers board as the market reacted positively to plans for a private sector rescue for the mortgage lender. Shares were up more than 36 per cent, or 23.5p, to 88p.

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