09 July 2008
Fresh economic gloom has hit the London stock market, leaving nervous investors in so-called "bear market" territory.
Turmoil in Asian and US markets saw the FTSE 100 Index fall by as much as 2 per cent, while warnings of an impending recession from the British Chambers of Commerce knocked confidence in the market.
At its lowest point, the Footsie fell to 5358.7 - more than 20 per cent below its peak in June last year. The downward trend fits the classic definition of a "bear market" in which shares steadily decline.
Shares did later make up some of the earlier losses after comments from US Federal Reserve chairman Ben Bernanke that policymakers could extend lending efforts to investment banks.
However, experts have warned that more misery could be on the way for investors as the outlook for the UK economy darkens.
Capital Economics, chief European economist, Jonathan Loynes said: "The steep falls in equity prices seen over recent weeks have brought the UK stockmarket back into line with consensus expectations for the economy.
He said the falls had come as part of a general downturn in global stockmarkets in response to renewed concerns over the outlook for the US and global economies and a drop in "risk appetite".
"Were it not for the strength of the oil and mining sectors, the UK market would already be much lower," he added.
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