Stock market ‘panic’ hits top firms for £62bn

MORE than £62 billion was wiped off the value of the UK’s largest companies yesterday as London’s stock market suffered its biggest fall since the depths of the financial crisis.

Fears that the US and Europe may slide back into recession triggered “panic selling” and a plunge for stock exchanges on both sides of the Atlantic.

London’s FTSE 100 index closed down 4.5 per cent or 239.37 points – the 12th biggest points fall in its history and its largest drop since November 2008 – at 5,092.23, erasing nearly all of the past four days’ gains.

Investment bank Morgan Stanley warned that the economies of both the US and the European Union were “dangerously close to a recession”, sparking a fresh wave of sell-offs.

Germany’s Dax stock market dropped 5.8 per cent, while France’s Cac fell 5.5 per cent.

Will Hedden, a sales trader at IG Index, said: “Panic selling has accelerated. The fear factor has reached boiling point.”

Banking and mining stocks bore the brunt of the sell-off in London, with Royal Bank of Scotland plummeting 11.3 per cent to 21.95p, well below the 51p break-even price at which taxpayers could recoup their investment in the bailed-out bank.

Gold prices continued to hit record levels as investors looked for a safe haven for their money.