FTSE ends 4.5% lower as US tumbles

The FTSE 100 has ended the day deep in the red after Wall Street tumbled on continued global recession fears.

The index closed 4.5 per cent down, or 188.8 points to 4040.9, as the Dow Jones Industrial Average traded more than 3 per cent down, or 311.1 points, at 8722.4.

France's Cac 40 and Germany's Dax both finished more than 5 per cent down.

In London, fears of lower demand amid a recession sent commodity stocks sharply lower, with heavily weighted miners inflicting the most damage on the FTSE.

Banks and financial stocks were also hit in the sell-off, with Royal Bank of Scotland down 14 per cent.

The first acknowledgement of a likely UK recession from Prime Minister Gordon Brown and on Tuesday night from Bank of England Governor Mervyn King did nothing to aid sentiment, as the pound hit a five-year low against the dollar.

While the National Institute for Economic and Social Research has forecast Britain's economy will shrink by 0.9 per cent in 2009, marking the country's first full-year recession since 1991.

Kazakhmys was among the biggest FTSE fallers with a decline of more than 15 per cent, or 47.25p to 257.75p. Oil and metals are bought and sold in dollars and the greenback's strength caused prices to fall amid continuing fears of a global demand slump.

Vedanta Resources and Antofagasta - down 93.5p at 619.5p and 29p at 288.5p respectively - also featured prominently among the losers.

Many bank shares were on the back foot as Mr King also called the recent turmoil the biggest threat to the system in nearly a century.

RBS sagged 11p to 68.3p as analysts at Keefe, Bruyette & Woods slashed earnings forecasts. HBOS fell 7.8p to 74.6p and Barclays shed 18p to 224.5p.

Insurers were back in the red after Tuesday's brief respite. The lift from Prudential's reassurances fell as the wider market dropped, leaving firms such as Aviva 37.5p lower at 266p.

There were some bright spots from the market, with British Airways rising 4 per cent, ahead 6.1p at 148p as vague market rumours suggested Cathay Pacific may be looking at bidding for the airline.

GlaxoSmithKline was also ahead after third quarter profits of £1.88 billion came in ahead of market expectations. Shares rose 15p to 1143p. Rival firm AstraZeneca rose 35p to 2330p.

Winners: British Airways up 6.1p at 148p, Man Group ahead 10.25p at 354p, Drax Group up 9.5p at 614.5p and AstraZeneca up 35p at 2330p.

Losers: Kazakhmys down 47.25p at 257.75p, Fresnillo off 23.4p at 136.6p, RBS down 11p at 68.3p and Vedanta down 93.5p at 619.5p.

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