UK shares hit four-year low

Leading UK shares have fallen heavily amid increased investor concern over the outlook for airlines and the extent of any US retaliation for last week's terrorist attacks.

The market closed 165 points lower at 4,557, leaving it at a four-year low.

British Airways shares dropped more than 12% to a 10-year low of 143 pence after the company said it was cutting 5,200 more jobs on top of 1,800 announced earlier this month and trimming its flight schedule by 10%.

Investors were also occupied with concerns over the US military build-up in the Gulf.

Blinded

"The market is still blinded by uncertainty over the extent of American retaliation in the Middle East and how on earth they are going to do it," said Jeremy Batstone, head of research at NatWest Stockbrokers.

French and German stock markets were also substantially lower.

Paris's Cac 40 closed 135 points lower at 3,754 while Frankfurt's Dax was 183 points lower at 3,859 at 1530 GMT.

Among UK shares, banks and oil companies joined airlines among the biggest losers as investor pessimism about global economic prospects deepened.

No respite

HSBC lost 7%, HBOS dropped 4% and Royal Bank of Scotland slumped 9%.

Shell was 7% lower while BP slipped 3.5% amid additional doubts about the security of oil supplies in the event of military conflict.

And there was no respite for Marconi, the crisis-hit telecoms equipment maker, which slid 9.8% - another all-time low.