A week like no other leaves Footsie 8% worse for wear

STOCK markets across the globe plummeted yesterday, with Britain's blue-chip index almost dipping below the psychologically important 5,000 barrier, as fears over the Greek debt crisis battered bourses.

A difficult day for the Dax, too: Germany's main index was hit like others around the world. Picture: Getty Images

The FTSE 100 index plunged as much as 4 per cent to 5,045, before ending the day 137.79 points or 2.6 per cent lower at 5,123.02 – a three-month closing low.

That wiped about 30 billion off the market and rounded off the top flight shares' worst week since March last year.

The five-day losing streak has sliced a colossal 110bn off the value of the UK's biggest companies since Monday, when the index stood 7.8 per cent higher.

Sterling took a battering too, hitting a one-year low against the dollar at one stage below $1.45, and a two-week low against the troubled euro.

As traders fretted over a return to volatility not seen since the height of the credit crunch, European leaders struggled to convince markets that the Greek debt crisis would not spread to other countries and derail the continent's currency and economic recovery.

Analysts said fears over debt contagion in Europe largely overshadowed the indecisive General Election result, with the Conservatives falling short of the winning line.

The Tories said they would try to form a government with the Liberal Democrats after winning the most seats in the closest parliamentary election in a generation.

However, Manoj Ladwa, a senior trader at ETX Capital, said the uncertain result had helped to drag stocks lower. He said: "It looked like a hung parliament was priced in. Apparently not, and the market's selling off rapidly on the back of it."

Rebecca O'Keeffe, head of investment at Interactive Investor, the fund supermarket, added: "It is an extremely tough period for private investors who are dealing with an almost unprecedented series of events.

"They're having to contend with the fiscal crisis in Greece, the major fall in the US stock market, dramatic events in the commodities markets and the uncertainty caused by the UK election results."

The dramatic session for London investors began with a 100-point fall before the FTSE recovered its poise to stand in line with its opening mark. However, markets worldwide then went into freefall, as the Dow Jones Industrial Average tumbled, adding to Wednesday's dramatic 3.2 per cent fall.

That was despite a report showing that employers in the US added 290,000 jobs in April – the highest monthly figure in four years – as trader remained spooked by the previous session, which at one stage saw the Dow lose 1,000 points following a computerised sell-off.

The market regained two-thirds of that loss before the end of trading on Thursday.

US president Barack Obama said American regulatory authorities were evaluating the "unusual market activity" on Wall Street this week. He said the regulators would make their findings and recommendations public.

The White House said Obama was also being updated regularly on the situation in Greece.