An exceptionally volatile day saw the FTSE 100 index suffer another big loss, with the blue chip benchmark falling to its lowest level since April 1997 on fears of the prospects for military action in Afghanistan and on the outlook for the global economy.
The FTSE 100 index closed down 123.2 at 4,433.7, leaving it down 6.8 per cent on the week and 36 per cent below its peak at the end of 1999. Volume was exceptionally heavy with almost 4.2 billion shares traded, the highest level so far this year and a record 222,000 individual trades being conducted, compared with daily levels of 60,000 to 70,000 two weeks ago.
One leading retail stockbroker said yesterday's trading was quite different from earlier in the week, with many more sellers than buyers.
With military action expected over the weekend, few traders wanted to hold substantial positions at the close. And the political and economic outlook remains so uncertain, that few bargain-hunters were attracted.
Sentiment was weak from the opening after the 382-point fall in the Dow Jones Industrial Average on Thursday. Adding to the early volatility were the imminent changes in the constituents of the FTSE 100 index and the options expiry in mid-morning.
In futures trading, the Dow Jones Industrial Average was indicated as opening 500 points lower and that sent the UK market into tailspin during the morning. When New York eventually opened, the Dow's loss of just over 300 points almost came as a relief. The Dow's gyrations set the template for Footsie. At its worst, shortly before Wall Street opened, the blue chip benchmark was down 337.1 at 4,219.8 and looked set for its worst ever point loss. The market then rallied 300 points by mid-afternoon before slipping again in late trading.
To add to the market's confusion, problems with the feed between the London Stock Exchange and FTSE caused the 100 index to be frozen at 4,505 between 3.36 and 4.08.
The other indices were also sharply lower. The Techmark 100 fell 45.86 to 1,064.98, leaving it 81.5 per cent below its March 2000 peak.
