Shares plummeted with the biggest-ever points fall of the FTSE 100 index within minutes of opening on Tuesday after massive overnight losses in New York and Hong Kong.
At its worst the index lost 455 points, moving perilously close to the 4000 mark as the index mimicked the Dow’s free fall. But the market slowly snapped out of its earlier panic and by midday was hovering around 4500, down almost 300 points.
Engineering stocks dived in value with the rest of the market. The sector’s woes were compounded by the chancellor’s confirmation on Monday that, barring exceptional circumstances, the pound will remain separate from the European single currency until at least 2002.
The decision means that sterling is likely to remain at about DM3 for the foreseeable future, piling pressure on to exporters.
Smiths Industries, already down on Monday after a CBI report suggesting that exporters were still being hurt by the strong pound, dropped 32p to 840p. A week ago it was trading at 912p.
TI Group fell 24p to 658.5p, British Aerospace crashed 184p to 1,436p and ICI also lost out, shedding 96p to 830.5p.
GKN, which had earlier benefited from speculation that it could acquire Vickers once the company has sold car-maker Rolls-Royce, lost 79p to 1,310p. Vickers suffered moderately, falling 14.5p to 218p, with the City still happy at its decision to offload Rolls-Royce.