More than £25bn was wiped off London stocks as leading shares had one of their worst days of the year.

The FTSE 100 index of leading shares slumped almost 3%, or 143 points, to 5479.

The fall came despite the Bank of England's decision to slash UK interest rates by 0.5% to 6.75% in an effort to revive the UK economy and help stave off a recession.

Markets around the world also took a tumble as worries about the global economic recession resurfaced.

Taking profits

Dealers said there was an element of profit-taking as investors cashed in on recent strength in share prices.

Leading shares in Germany fell more than 2%, while France's main stock index slipped 1.76%.

In New York, US shares also got off to a poor start.

The Dow had slipped 46 points to 8737 by 1630 GMT as traders waited nervously for a speech from US Federal Reserve Chairman Alan Greenspan.

The fresh falls come in the wake of a disappointing performance on the Asian stockmarkets, with shares in Hong Kong and Japan suffering heavy losses.

Dealers remain nervous about the economic turmoil that has ravaged Russia, Asia and Latin America.

Some believe the recent recovery in global share prices could have come to an end.

Analysts pointed out that the Bank of England's decision to cut interest rates by more than expected illustrated that the outlook for the world economy was bleaker than expected.