MORTGAGE bank Northern Rock led the London market deep into the red yesterday as it became the UK's first high-profile victim of the global credit crunch.
The FTSE 100 Index closed 74.6 points lower at 6289.3 -a fall of more than one per cent - after Northern Rock was forced to turn to the Bank of England as a lender of last resort after its funding lines dried up.
But the Footsie was helped marginally in late trading by better-than-expected data on US factory output and consumer confidence, which regained some of the losses seen earlier in the day, when the market dropped by 154 points at one stage.
The latest evidence of the impact of tightening credit markets sent Northern Rock's shares tumbling 32 per cent.
The crisis had the biggest knock-on effect on specialist lender Paragon, which fell 60p to 298p in the FTSE 250 Index -a fall of nearly 17 per cent. Assurances from the firm over its financing in light of the share drop helped soften the blow, however, easing the earlier near 27 per cent fall.
Buy-to-let firm Bradford and Bingley, which is also in the second tier, dipped nearly eight per cent, or 27.5p to 329.75p, and blue-chip Alliance and Leicester fell seven per cent, or 64.5p to 873p.
Barclays was 19p cheaper at 596p, even though it sought to ease market worries with a reassuring trading statement, which it issued ahead of a meeting of its investors to approve the planned takeover of ABN Amro. Shareholders later voted to back the deal, with 90 per cent in favour.
Investors also rushed to sell housebuilding shares, amid fears that the crisis could cause a slowdown in the property market.
Persimmon was off 72p at 1016p, while Barratt Developments fell 41p to 829.5p -a drop of nearly five per cent. In the FTSE 250, Taylor Wimpey declined 18.75p to 313p and Bovis Homes dipped 41p to 693.5p.
Meanwhile, retail stocks were affected by signs of a further easing in consumer confidence.
Argos and Homebase owner Home Retail Group was down 15.25p at 399.5p, Next dipped 80p to 1920p and Marks and Spencer fell 216.5p to 597p.
The biggest Footsie risers were Reckitt Benckiser, up 41p at 2799p, Reed Elsevier, ahead 6.5p at 608p, Smiths Group, up 6p at 1009p and 3i Group, up 3p at 1004p.
The biggest Footsie fallers were Northern Rock, down 201p at 438p, Shire, off 92p at 1154p, Alliance and Leicester, down 64.5p at 873p and Persimmon, off 72p at 1016p.
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