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Tuesday, 30 October, 2001, 21:49 GMT
Markets take a dive
Stock exchange trader graphic
US shares swung lower on Tuesday, while London's FTSE 100 index spent much of the day below the psychologically important 5,000 points barrier.

News that US consumer confidence had plunged to its lowest level since February 1994 piled more pressure onto US stocks, already jittery over the after-effects of the 11 September attacks.

The Dow Jones Industrial Average share index see-sawed throughout the day, and closed down 157 points at 9,121, after plunging by as much as 180 points earlier.

In London, job cuts and a raft of bad corporate news saw the FTSE shed 82 points to close at 5,003.6.

But that figure represented a considerable bounce from far lower levels seen just after Wall Street opened.

US worries

The US market was also dragged down by bleak forecasts from companies such as software provider Openwave Systems, concerns about Argentina's financial crisis and general economic gloom.

The Nasdaq hi-tech index shed 32 points to close at 1,667.

The main European bourses were also lower, as investors stayed out of the market ahead of Tuesday's US consumer confidence figures.

Job cuts

The FTSE index fell below 5,000 for the first time in three years on 11 September as the markets reacted to events in the United States.

It recovered steadily to top 5,000 on 4 October, but a 2% slide on Monday followed by further falls on Tuesday saw it once again nudge three-year lows.

The tone for the day was set by engineering giant GKN, which warned on fourth-quarter profits and announced it was cutting 1,250 jobs.

GKN shares initially lost 10% of their value on the news, before recovering almost all of those losses, and closing at 271p.

Venture capital company 3i Group added to the gloom by announcing it was closing seven offices in Europe and cutting 185 jobs, sending shares in the company down 6%.

Meanwhile German travel giant Preussag said it was cutting 400 jobs from its UK operations, while leisure group Whitbread said it was axing 300 from its Marriott Hotels group.

Argentina worries

US and Asian markets were hit by worries that Argentina might default on its $132bn debt and the anxiety followed through into London trade, dealers said.

But Argentina's government was keen to quash rumours of default.

President Fernando De la Rua insisted that the country would keep up its debt payments to investors and maintain the peso's one-to-one peg with the US dollar.

"There will be no devaluation, no default," he told reporters shortly after the Buenos Aires stock market opened.

Nonetheless, investors are becoming impatient at the slow pace of reform in Argentina - something that has raised fears that the government might need to do something drastic in order to dig the economy out of its current slump.

Threat of further attacks

Some traders were saying that the threat of further terror attacks was finally beginning to feed through into the markets.

Once stocks started to rally on 21 September, traders ignored bad news and focused on the good, said one.

Astute investors may have realized that the rally was based on emotion rather than fundamentals and the markets may give back much of their recent gains, he said.

View market data
Launch marketwatch
The Markets: 9:29 UK
FTSE 100 5760.40 -151.7
Dow Jones 11380.99 -119.7
Nasdaq 2243.78 -28.9
FTSE delayed by 15 mins, Dow and Nasdaq by 20 mins

Terror's impact

Signs of a slowdown

Rate cuts

Analysis

Key players

FULL SPECIAL REPORT
See also:

30 Oct 01 | Business
US consumer confidence plunges
29 Oct 01 | Business
Record US budget surplus achieved
30 Oct 01 | Business
Ford boss Jacques Nasser 'ousted'
29 Oct 01 | Business
US stocks dive on Argentine fears
30 Oct 01 | Business
GKN to cut 1,250 jobs
30 Oct 01 | Business
Whitbread lines up Cafe Rouge sale
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