The FTSE 100 and FTSE techMARK indices dropped precipitously in morning trading Tuesday, following the Nasdaq's second-biggest one-day decline on Monday.
As of 1100 GMT the FTSE 100 was down 72.4 at 6,461, while the techMARK 100, which monitors volatile high-tech shares, was off 294.78 at 4066.52. The selloff continued into the early afternoon, with the FTSE 100 down 137.8 points to 6,395 and the techMARK down 322 to 4039.
The FTSE 100 had already closed down Monday, due to fears of a rerun of last week's equity market white-knuckle ride and a late slide by index megaweight Vodafone AirTouch (quote: VOD). The Nasdaq's plummet occurred mostly after trading hours had ended in London.
Technology, media and telecoms shares led London indices downwards.
Among Internet bellwethers Freeserve (quote: FRE) sank 24 to 408p, Lastminute.com was down 8.5p to 195, and QXL.com (quote: QXL) lost 83 points to 400p.
Thus (quote: THUS) was off 44 at 400p. Logica (quote: LOG) was down 288 at 1,915p. Handheld computer maker Psion (quote: PON) was down 425 at 4,000p, while ARM Holdings (quote: ARM) sank 420 to 3,481p. Energis (quote: EGS) was down 156 to 3,080p while Vodafone AirTouch (quote: VOD) lost a relatively modest 15.75 to 322.5p, following news that its acquisition of Mannesmann was likely to go through.
"Old economy" stocks benefited as investors fled from tech shares, with companies such as Cadbury Schweppes, Bass and Hilton Group gaining ground.
After a quiet session Monday, the UK equity benchmark closed down 36.5 points or 0.6 percent at 6,533.4, cementing itself in a trading band carved out over the last month around 6,500. "The FTSE is just marking time during a lull in proceedings," said Deutsche Bank equity strategist Bob Semple, although he added that the calm should soothe many brows still fevered after last week's unprecedented turbulence.
But dealers said the increasingly savage price swings seen across the blue chips were acting as a brake on the overall FTSE. "There is lot of uncertainty around," said one senior salesman. "Having seen the volatility leap so dramatically, a lot of people are not prepared to take any kind of risk. In this environment you can be proved spectacularly right or wrong in a very short space of time."
In addition to general investor edginess, the FTSE fell foul of a mid-afternoon slide Monday by Vodafone amid worries it could be forced to overpay in the auction for the UK's third generation mobile phone licences. Dropping 4.2 percent at the close, Vodafone alone lopped 41 points of the FTSE.
However, another analyst suggested Vodafone's weakness was due to nerves ahead of a European Union ruling on its takeover of Mannesmann due on Wednesday. Overall, the FTSE ended up with advancing issues in the ascendancy by 56 to 43 -- painting a more positive picture of the day's events.
But volume was low at just over 1.25 billion shares traded during official hours, compared with the two billion-plus totals regularly chalked up in February and March.
Reuters contributed to this report.
For full coverage see the Market Mayhem roundup.
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