London shares plunge by £64bn

About £64bn was wiped off the value of British companies as the London Stock Exchange suffered its biggest one-day points fall since 1992.

The day's big losers

Capital Radio 670p
-23.64%

Invensys 116.25p
-9.68%

Pearson 1229p
-7.58%

BA 306p
-6.78%

Barclays 1885p
-6.25%

Vodafone 193p
5.2%

BT 469p
-4.85%

A host of profits warnings - led by Invensys and Capital Radio - and further losses in American markets sent the benchmark FTSE 100 index falling to its lowest levels since October 1998.

The FTSE 100 index of leading UK stocks plunged to close down 225.9 points at 5,314.

It now stands more than 25% lower than the peak it reached on 31 December 1999.

The last time the market experienced a one-day fall of this size was when the pound crashed out of the European exchange-rate mechanism almost a decade ago.

A 'crash'

The BBC's business editor Jeff Randall described the fall as a "crash". He added the stock market "is telling us that a recession is on the way."

The latest losses were fuelled by poor company news, with profits warnings issued from Capital Radio, and industrial automation and controls company, Invensys.

Telecoms giant BT was another big faller, down more than 5% to 469p, as the pressure grew on its chairman and chief executive to tackle its debt mountain.

Hard times

Capital Radio, the UK's largest commercial radio station, warned that its profits would be 10% lower than last year.

The radio group blames the decline in advertising revenue for its lower income streams, and its stock was promptly downgraded by UBS Warburg.

Shareholders in the radio station watched their investments shrink by almost a quarter, with the stock price diving 24% to 670p from 877.5p.

The day's winners

Powergen 714p
+3.92

Boots 600.5
+1.44%

M&S 230.25p
+2.34

Sainsbury 373.35
+0.6%

And the industrial automation and controls company Invensys slithered 17% to 109p from the previous close of 129p, before scrambling back a little to 116.25p.

The firm issued its second profits warning in six months, and said that it was stepping up its cost reduction programme by laying off 5,000 staff by the end of its financial year.

Only fourteen of the one hundred stocks that make up the index managed to rise, and most of these were retailers.

Burst bubble

Fifteen months ago, the FTSE 100 index hit an all time high of 6,930 points.

Since then the internet bubble has burst, and technology and telecoms stocks have come tumbling dramatically down.

Drops have been especially steep over the last two weeks, fuelled by fears of global economic slowdown in the US and its effect on the European markets.

The bellwether index has lost 14% of its value since the beginning of the year.

And this comes after the index ended the year 2000 10.2% lower compared to the previous year, only the third time the index has ended down on the year since it was first launched in 1984.