Selling torrent puts Footsie under 4000

THERE it goes. The stock market crashed 5.4%, the FTSE 100 falling below 4000 for the first time since December 1996, as the torrent of selling became a flood.

It closed down 229.6 points at 3994.5, wiping another £55bn off top shares. Since the peak two years ago, UK shares have lost a staggering £750bn, or £34,000 per household. For the last two months alone, the figures are £350bn, or £16,000 per household.

Sir Paul McCartney was plain old Mr and Bill Clinton had just been reelected for a second term when the London market was last at these levels.

It began promisingly. London opened up 35 points and held its nerve all morning. Then Wall Street opened, and jumped off the balcony. The Dow Jones plunged 160 in its first half an hour, was down 275 by the time London closed and slumped a huge 439.5 by midevening, taking it within 10 points of its post-September 11 low.

Fears of fresh horrors from WorldCom and others swamped an optimistic speech by George Bush, but later a remarkable rally clipped the Dow's fall to 45 points at 8639.19. Dealers called the day a 'big bad bungee jump.'

Back home, pressured pension funds are more interested in cutting their exposure to equities than in buying more shares, creating a vicious circle that puts further downward pressure on markets. In a revealing survey quietly published yesterday, stockbroker Baird found big City institutions 'much more cautious about the outlook for global equities' than stockbroking analysts - and also deeply sceptical about profit forecasts.

The bloodbath was across the board. In a crash, blue chips and even supposed 'defensive' stocks, with strong management, balance sheets, market positions and profits, get dragged down with the rest. Supermarket leader Tesco fell 11 3/4p to 213 1/2p. BAT, the world's secondbiggest cigarette maker, slumped 35p to 635p (giving it a 5.4% yield), rival Imperial Tobacco dropped 52p to 940p, Gallaher 24 1/2p to 573p.

Household goods group Reckitt Benckiser fell 45p to 1075p, though it reported good quarterly growth, and Unilever tumbled 25 1/2p to 533p. Smirnoff parent Diageo, the world's biggest booze company, crashed 52 1/2p to 694 1/2p, despite reports it is holding out for a high price as it auctions off Burger King. Mining giant Rio Tinto fell 60p to 1100p, although gold - as usual - gained amid the meltdown, rising to $319 an ounce. Hanson, the gravel company, tumbled 21 1/2p to 373 1/2p, despite upgrades from Deutsche Bank and JP Morgan.

The FTSE's biggest members tumbled, oil giant BP down 37 1/2p to 462 1/2p and //Vodafone 4 1/2p to 86 1/4p. Glaxo fell 50p to 1175p and AstraZeneca 130p to 2240p.

Unsurprisingly, those most exposed to a downturn were badly battered. Fund manager Amvescap led the blue chip fallers, declining 49p to 401p, closely followed by Schroders, down 51p to 430p. Legal & General held up well, easing just 3p to 112p.

Banks were hit hard on fears that bad debts will soar in a protracted slump. Global giant HSBC slumped 26p to 693p, though SG analyst Richard Staite, in a brave move, highlighted attractive takeover targets in Mexico and stuck by his 750p price target. Asian banking rival Standard Chartered fell 14p to 631p.

Rat catcher and plant waterer Rentokil Initial tumbled 21 1/2p to 221p following a downgrade from Morgan Stanley, which predicts slow earnings growth next year and sees better value in rival support services groups Compass (341 1/4p, down 10 1/2p), and Capita (245p, down 9p).

Travel bookings have surged since the World Cup, helped by rotten weather at home, says ABN Amro. It tips tour operators First Choice (106p, up 4p) and My Travel (142 1/4p, up 3 3/4p). You can hardly blame City traders for wanting to get away from it all.