Shares slump amid job cuts and soaring home repossessions

Shares in London slumped today on fresh fears over the state of the economy and a heavy sell-off in New York.

The FTSE 100 index crashed below the 4000 level - down 91.7 to 3926.67 - as City trading screens flashed red. It saw £21 billion wiped off the value of Britain's blue-chip companies.

The slump followed a dismal night on Wall Street where the Dow Jones Industrial Average fell 89.68 points to a six-year low of 7465.95. It came amid a fresh wave of gloomy economic news on both sides of the Atlantic including more British job cuts and soaring home repossessions.

The Council of Mortgage Lenders was expected to show that more than 40,000 people lost their homes last year while government figures showed repossession orders made by courts increased in the final three months.

Anglo American announced 19,000 job cuts around the world with hundreds of British jobs under threat at its Tarmac business.

Bank of England deputy governor Sir John Gieve warned that Britain could slide into a decade-long depression similar to that suffered by Japan in the Nineties.

City commentator David Buik, of BGC Partners, said: "The slew of dispiriting international economic data is now starting to resemble a tsunami. It just gets worse and worse."

Only one FTSE 100 stock was in positive territory in early trading - insurer Prudential. Banking stocks were once again under pressure as speculation that they will need to turn to the Government for more emergency funding refused to die down.

Royal Bank of Scotland was down 4.6 per cent, Lloyds Banking Group one per cent, and Barclays three per cent. Mining firms were also on the slide as the global economic downturn hit demand for metals.

Matt Buckland, a dealer at City trading firm CMC Markets, said: "This could be a rather damaging end to the week after the Dow closed last night below the key 7,500 level - its lowest in around six years. Investors are quite simply running out of short-term confidence with equities - especially among the banks."

The Bank of England has cut interest rates to a 315-year low of one per cent as is now preparing to print money to flood the economy with cash.