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Investors running scared as FTSE plunges lower

Investors running scared as FTSE plunges lower

Category: Investments

Updated: 25/05/2010
First Published: 25/05/2010

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.
Stock markets around the world have plummeted as fears over the debt problems in the eurozone refuse to go away.

By mid afternoon today, the FTSE 100 index was down 2.59% at 4,938, its lowest level for eight months.

Since reaching a 22 month high of 5,825 in April, the index has slumped by around 15%.

The leading US index, the Dow Jones, was down 2.13% for the day, France's CAC40 down 3.33%, and Germany's Dax index down 2.75%.

Commenting on the news that the FTSE had fallen below the 5,000 mark, Adrian Lowcock, senior investment adviser at Bestinvest, said a combination of factors had driven markets lower.

These included uncertainty over the effectiveness of policies in Europe, which has been exacerbated by fears concerning regulatory actions over banks, bans on short trading and disappointing economic data.

US economy figures also showed weakness in its labour market, which has been compounded further by poor manufacturing data from Germany.

"Add to that the increased nervousness around potential conflict between North and South Korea and the concerns over Spanish banking strength and the markets have lost confidence," he added.

"In light of this, the FTSE falls below 5,000. But what does it mean? The number in itself is not significant and is purely psychological. However, once we have breached it the bears will be more able to drive the market lower."

The fall in the markets is bad news for investors in stocks and shares ISAs and those who have other equity investments, including pensions.

Although it is generally acknowledged that the potential for greater returns is available through stocks and shares investments, the danger always exists that money could be lost too.

People who prefer not to take risks with their money are usually urged to consider savings accounts such as cash ISAs and fixed rate bonds.

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