Bear Market: Alarm At FTSE Plunge

Investors have been dealt a fresh blow with the UK's leading share index falling to its lowest point this year.

Concerns over the US economy and a new surge in oil prices pushed the FTSE 100 Index down to a close of 5261.6.

It is now well into "bear market" territory - defined by a fall of more than 20% from the stock market's peak in June last year.

The FTSE began the day positively after the US markets closed strongly on Thursday night. CMC Markets analyst James Hughes said: "When you get this sort of movement all rational thought goes out of the window.

"It's hard to think when there is going to be a respite."

Investors have been spooked by a spike in oil prices to almost $146 which followed Iran - a major producer - test-firing missiles this week.

The market has also been jolted by concerns over the financial health of US mortgage giants Freddie Mac and Fannie Mae.

This has led to speculation that the US government could be forced into a Northern Rock-style bail-out of the two firms.

BGC Partners' David Buik added: "Markets in Europe have a dose of Freddie and Fannie-itis."

In London retail and banking stocks such as B&Q owner Kingfisher and Royal Bank of Scotland were among the worst hit.

Oil giants BP and Royal Dutch Shell were among the few firms that saw gains, thanks to the high crude prices

Source:http://uk.biz.yahoo.com/11072008/140/bear-market-alarm-ftse-plunge.html