The FTSE 100 finished the day in the red but fought back from fresh five-year lows as concerns about a global recession continue.

By the close, the index was 30.8 points down at 3852.6 having plummeted almost 220 points in early trading to its lowest point since March 2003.

On Wall Street, there was a better-than-expected start for the Dow Jones Industrial Average which reversed earlier losses and by 5.05pm was 120.3 points higher at 8498.9.

The earlier sell-off followed a 6.4 per cent plunge for Japan's Nikkei which closed 486.2 points down at 7162.9 - a 26-year low. Meanwhile, Hong Kong's Hang Seng tumbled almost 13 per cent.

The sharp declines came as South Korea's central bank made its biggest ever rate cut to prevent Asia's fourth-largest economy from lurching into recession, while Australian and Hong Kong central bankers took action to improve liquidity.

But a broad hint from European Central Bank president Jean-Claude Trichet that more rate cuts were "possible" next week helped London's top-flight claw back most of the losses.

Meanwhile, September sales of new homes in the US improved on the 17-year low seen in August, which briefly pushed the Dow Jones into positive territory.

However, Asian woes put the spotlight on banks HSBC and Standard Chartered.

Both banks - among the least scarred of the UK's banks so far in the current turmoil - have a major presence in the region but Standard Chartered was the FTSE's biggest faller - shedding more than 10 per cent or 78p to 680p.

HSBC clawed back bigger falls but was still 33p off at 663p.

This contrasted with HBOS and its white knight merger partner Lloyds TSB - enjoying a rare day of gains - up 1.1p at 61p and 4.1p at 169.9p respectively.

Many miners however dragged on the FTSE as concerns over global demand grew, with Xstrata down 68.5p to 709p and Lonmin off 87p at 1087p.

Oil firms also suffered as crude oil fell to a 17-month low at one point despite cartel Opec's move to cut production on Friday.

Oil and gas services firms Wood Group and Petrofac suffered most, down 16.1p to 174p and 32.5p to 340.75p respectively. BP, which reports third-quarter results tomorrow, lost 2p to 438p.

Another faller was Vanish-to-Cillit Bang firm Reckitt Benckiser despite the firm posting a 12 per cent rise in third quarter profits and hiking full-year sales targets. Shares fell 21p to 2577p.

In the FTSE 250 however, Persimmon was on the up despite a further £600 million in landbank writedowns as house prices continue to fall.

Persimmon gained 10p to 227.25p, as it also said full-year results would be in line with expectations, while it was helped by positive comments from analysts at Merrill Lynch.

But automotive and aerospace engineer GKN meanwhile slid 11.5p to 106p after it warned over profits and announced plans to cut its global workforce and shut down plants.

The FTSE winners were Antofagasta up 23.5p at 300p, British American Tobacco ahead 107p at 1596p, BSkyB up 23p at 352p and GlaxoSmithKline up 56.5p at 1184p.

The biggest losers were Standard Chartered down 78p at 680p, Xstrata down 68.5p at 709p, Petrofac down 32.5p at 340.75p and Wood Group off 16.1p at 174p.

David Buik of BGC Partners said: "With the world's economy in turmoil, it probably won't pay to keep looking at stock markets for the time being."

He added: "They are just a barometer for sentiment and sentiment is desparate and is likely to remain so for some time. The fact that emerging nations are now deeply embroiled in credit issues just exacerbates the appalling state of the world's economy."

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