Tremors on Square Mile as Footsie falls 2.7%

The FTSE 100 index slumped 146.15 points, or 2.7 per cent, to close at 5,246.99, meaning some 150 billion has been sliced from UK blue-chip stocks this week. The market is at its lowest point for nearly a year.

The Footsie has fallen by 9.7 per cent over the course of the week, as investors have fretted over the eurozone debt crisis and the possibility of the United States economy slipping back into recession.

Jonathan Stubbs, an analyst at Citigroup, warned: "The world has changed in the past few weeks. Growth and credibility have been questioned."

Sandy Jadeja, chief technical analyst at City Index, added: "What is clear now is that next week is critical for the markets.

"If we see a break below this week's low then that would provide a technical confirmation for a trend continuation to the downside for the weeks ahead."

Volatile trading ripped through the London market, with heavy falls overnight in Asia dragging the Footsie down 3.5 per cent within half an hour of the market opening to a session low of 5,202.62.

However, better-than-expected employment figures from the United States gave the market an early-afternoon boost, sending it up to 5,386.59, just six points shy of Thursday's closing price.

European markets also experienced a roller-coaster ride, with France's CAC down 1.3 per cent, and Germany's DAX 2.8 per cent lower.

Yet Spain's Ibex 25 index closed just 0.2 per cent lower, having been in positive territory for some of the day after traders reacted to rumours that the European Central Bank would buy up Spanish and Italian debt.

The price of gold rose to $1,658 an ounce as investors searched for safe havens. The pound - which has been seen as a relative haven among currencies - was up against the dollar and the euro, at $1.64 and €1.15 respectively.