Markets around the world tumble

FTSE 100 falls 3.2pc and Dow Jones touches 12-year low, while Gold price breaks through $1,000 barrier.

• Global stock markets tumbled on Friday as concerns mounted about the depth of the recession and for the future of the banking sector.
• In London, the benchmark FTSE 100 tumbled below 4,000, closing down 129.31 points – 3.2pc – at 3,889.06 in a shake-out that left it down 7.1pc on the week.
• Across Europe, the picture was the same, with the French CAC-40 and the German Dax down 4.25pc and 4.76pc respectively.
• However, in New York, the Dow Jones went on a roller-coaster ride, tumbling 216 points to a 12-year low before settling down 100.28 at a six-year low of 7365.767 after Senate Banking Committee chairman Christopher Dodd said President Barack Obama’s administration was trying to avoid nationalisation of a major bank, but admitted such a move may be possible for a short time.
• His comments saw Citigroup shares tumble 30pc to $1.77, and Bank of America (BoA) fall 28pc to $2.78.
• Both banks dismissed persistent rumours of nationalisation, with BoA chairman Ken Lewis saying that the speculation was based on “a lack of appreciation for the adverse ramifications for our customers and the economy”.
• However, the Dow recovered sharply in late trading, after the White House said the President believed a privately held banking system was the “right way to go”.
• Investors sought safety in gold, which broke the $1,000 mark, rising $29.70 to $1,006.20 an ounce on the New York Mercantile Exchange.
• Natalie Dempster, of the World Gold Council, said: “People are fearful of the combined impact of near-zero interest rates, quantitative easing and the fiscal stimulus packages on future inflation. Investors are looking at solutions to the problem and realising they are positive for the price of gold.”
• In the currency markets, the dollar fell broadly against most major currencies, with the euro up 0.8pc to $1.2763, and sterling also rising 0.8pc to $1.4401.
• On Wall Street, Wells Fargo also tumbled 25pc at one stage, while Morgan Stanley sank 7pc. But the sell-off was not confined to financials, with General Motors, which earlier this week asked the US government for an extra $16.6bn in Treasury funds, sliding to 70-year lows, taking its market value below $1bn.
• In London, shares in troubled Royal Bank of Scotland fell 11.5pc ahead of Thursday’s full-year results, while rumours resurfaced that HSBC will have to raise at least £10bn.
• The FTSE 100 was also weighed down by falls in the heavyweight mining sector, spurred by worries that the global recession will create less demand for raw materials.
• Anglo American crashed 17pc as it cut its final dividend and a further 9,000 jobs. Xstrata, Kazakhmys and Rio Tinto posted falls in excess of 9pc in sympathy.
• There were just six blue-chip risers led by Prudential which rose 11pc to 285p after the life assurance group disposed of it Taiwanese operations.
• The FTSE 250 came close to falling through the 6,o000 level, falling more than 200 points to close down at 6,008.82.
• Darren Sinden, a trader at Schneider Trading, said the FTSE 100’s failure to hold the psychologically important 4,000 support level was a worrying sign. “The three month-low for the FTSE 100 is 3,734 and it is certainly a possibility that the index could fall back to this level. What is the reason for the market to go up?”