FTSE 100 slumps into bear market

The FTSE 100 fell after early gains and has closed as a bear market.

Defined as a 20 per cent fall from a 12-month high, the blue-chip index slipped below the 5,386 level this afternoon that marks this point, closing at 5,261.60.

The FTSE 100 finished 2.69 per cent down, as oil reached a new high of $147 a barrel.

Banks were hit, with Barclays 5.89 per cent down and Alliance & Leicester falling 4.47 per cent. Royal Bank of Scotland shares fell 8.6 per cent to 182.7p.

The leisure industry also finished lower, with pub operator Enterprise Inns falling 8.61 per cent to 302.5p, as did retailers.

Marks & Spencer was down 5.41 per cent to 227.25p at the close of the day, while Home Retail Group slumped 8.18 per cent.

Mining stocks kept rising amid the fallers, with Eurasian Natural Resources soaring 8.6 per cent to £11.37. Cairn Energy was also up 3.72 per cent, while Carphone Warehouse also rose 3.28 per cent.

The fall in stock prices makes the UK the eighth of the world's ten biggest equity markets to fall into bear territory since November.

Indexes in the US, Japan, China, France, Hong Kong, Germany, and Australia have all dropped at least 20 per cent from their highs.