Page last updated at 23:14 GMT, Tuesday, 8 July 2008 00:14 UK

UK hits bear market as stocks dip

Trader in London
London shares opened sharply lower following Asia's lead

European and Asian stock markets have fallen amid concerns about the state of the world economy and the impact slower growth will have on company earnings.

The UK's FTSE 100 index fell below 5,385 points in early trading, 20% below its June 2007 peak of 6,732.

The fall put the UK market in bear territory, often defined as a 20% fall from a stock index's recent peak, although it later closed at 5,440.5.

US shares opened slightly lower but ended in positive territory.

The US blue-chip Dow Jones index rose sharply to close 152.25 points, or 1.36% higher, at 11,384.21.

Analysts said Wall Street had taken heart from a fall in oil prices and from US Federal Reserve chairman Ben Bernanke's comments that the central bank might extend its emergency lending facility to 2009.

Global factors

The main European share indexes all closed lower.

The Cac 40 index in Paris closed down 1.54%, while Frankfurt's Dax index ended 1.43% down.

Everyone is reassessing the widely-held view that the worst of the credit crisis would be over by now
Ed Yardeni, Yardeni Research
The FTSE 100 index finished 72.2 points, or 1.3% down, at 5440.5 points, after dropping by almost 3% in morning trade.

UK banks had seen some of the largest falls, with beleaguered lender Bradford & Bingley plunging 19% on continued concerns about its fund-raising plans.

European markets tracked earlier slides on Wall Street and in Asia on fears about the health of the fragile US economy.

Hong Kong's Hang Seng index slid 3.2% and Japan's Nikkei fell by 2.5%.

The G8 group of industrialised nations, meeting in Japan, voiced strong concern about surging food and oil prices, which they said posed risks for a global economy strained by the credit crunch.

US markets had fallen on Monday on fears that two of the country's biggest mortgage providers would have to raise even more money to strengthen their balance sheets.

Some key US firms start unveiling their latest quarterly results this week and some analysts believe that bank earnings will sustain further hits from a lingering credit crunch.

"Everyone is reassessing the widely-held view that the worst of the credit crisis would be over by now, and coming to the same conclusion: The worst may not be over and it might last well into 2009," said Ed Yardeni of Yardeni Research.


FTSE 100
23.70 0.44%
19.54 0.34%
Cac 40
14.48 0.38%
Dow Jones
78.53 0.76%
35.31 1.58%
BBC Global 30
20.65 0.36%
Data delayed by at least 15 minutes

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