The FTSE 100 index of leading UK shares has
fallen below the 5,000 level for the first time in
nearly three years.
The index last closed below 5,000 in October 1998 when world stock markets were recovering from the Asian economic crisis.
Sharp falls on world markets in the past few days were prompted by worse than expected US unemployment data.
A series of gloomy economic indicators and poor company results have also dragged down share prices as the global slowdown spreads.
Asian and other European markets were also lower in Monday trading.
Across the board
At 1131 GMT, the FTSE 100 index was down 161 points, or 3.1%, at 4,908, wiping more than £40bn off the value of Britain's biggest companies.
Scottish Power led the fallers, losing 13% of its value after it warned of $300m (£205m) excess costs at its US Pacificorp unit.
A group of technology and media stocks tipped for relegation from the FTSE 100 index later this week also took a pounding.
Shares in Colt Telecom, Carlton Communications, Misys and Sprint were all down sharply.
No sector escaped the rout, with just four FTSE 100 components gaining in value.
Shares in investment management group Amvescap dropped 12%, as the dismal performance of world equity markets continued to eat into potential profits within the financial services sector.
Shares in Schroders gave up nearly 8% to trade at 723p and there were losses of between 2% and 6% percent across the rest of the investment sector.
But trading volumes were thin, with a meagre 524.8 million shares changing hands in 34,396 transactions by mid-morning.
Bottoming out?
The 5,000 point barrier is psychologically important, but many traders see 4,900 as the FTSE's key support level, at which prices will start to pick up.
David Sneddon, technical analyst at Credit Suisse First Boston, said the market should bottom out at between 4,950 and 4,900.
"We should see some stabilisation and consolidation at this level in the near term," he said.
However, other analysts were predicting further big falls, with some suggesting as much as 20% more could be wiped off the value of the market.
'Not the norm'
Commenting on the FTSE rout, Jeremy Batstone, of Natwest Stockbrokers, said: "A lot of investors unrealistically think we can go back to growth in returns of around 20%, as was the case in the latter part of the 20th century.
"But until we change our mindset and realise those returns are not the norm, we will not be able to sow the seeds of a lasting recovery."
Alex Scott, fund manager at Barclays Stockbrokers, said that there had been little in the morning's company results to boost confidence.
"There is nothing in terms of good corporate news for investors to cling on to," he said.
Marconi boost
Crisis-hit telecoms equipment maker Marconi led risers in mid-morning trading, adding 2.75p to 32.5p.
The share boost follows reports in the Sunday Times newspaper that suggested Marconi's new management was considering breaking up the company in order to avert a complete collapse of the group.
HBOS, the newly-merged Halifax and Bank of Scotland, also managed to buck the dismal trend, with an upbeat start to its trading life.
Shares in the group rose 3p to 834.5p by mid-morning - keeping its head above water despite widespread falls among its rivals.
The other two gainers were property group
Canary Wharf and Morrison's supermarkets.
-- Anonymous, September 10, 2001