FTSE slumps 8.9 percent, capping worst week since 1987

Britain's top share index ended 8.9 percent lower Friday contributing to a 24 percent slump for the week, the second biggest weekly fall ever, as investors ran scared from the spectre of a full global recession. The FTSE 100 closed down 381.7 points at 3,932.1, its second biggest points loss ever, dropping below the 4,000 level for the first time in more than five years after its worst week since the crash of October 1987.
With another 90 billion pounds wiped off the FTSE 100's value Friday, there was just one gainer - news and information provider Thomson Reuters, up a penny. "The FTSE 100 went below 4,000 today, a level it first achieved in September 1996, that means if you invested in equities 12 years ago, you've seen no gain, which is unbelievable," said Manoj Ladwa, senior trader at ETX Capital.
Banks were the top-weighted losers, with the FTSE 350 banks index shedding more than 11.5 percent. Barclays, Royal Bank of Scotland, HSBC, HBOS, Lloyds TSB and Standard Chartered were down between 8.1 percent and 25.3 percent. Other financials also suffered, with fund managers Schroders down 5.2 percent, while 3i Group shed 16.2 percent, and insurers Legal & General and Prudential lost 16.1 and 10.5 percent respectively.
Financials also headed another slide on Wall Street which sent the US benchmark S&P 500 index below the 900 level for the first time in five years on fears tighter credit would spawn world recession. Heavyweight energy stocks were the second-worst performing sector as crude prices dropped below $80 a barrel.
BP, Royal Dutch Shell, BG Group and Cairn Energy sagged between 6.1 percent and 9.3 percent. Miners sank along with weaker metal prices, with BHP Billiton, Rio Tinto, Anglo American, Xstrata, Antofagasta, and Vedanta Resources dropping between 7.1 and 13.2 percent.
Retailers were also big casualties. Marks & Spencer, Next, Kingfisher, Tesco and Sainsbury sagged between 3.8 percent and 10.5 percent. Even stocks normally deemed defensives, such as drugs and tobaccos, also took a beating, with AstraZeneca, GlaxoSmithKline, British American Tobacco, and Imperial Tobacco shedding 6.7 percent to 9.9 percent.
"There are undervalued stocks and buying opportunities out there, but only the brave dare touch them," said ETX Capital's Ladwa. "Markets are normally held in equilibrium by the balance of fear and greed. But at the moment, greed has gone into hiding and fear rules the roost," Lawda said.