Investors endured their tenth day of turmoil yesterday as the FTSE 100 index continued to suffer its longest-ever losing streak.

The rollercoaster session was hit by the falling value of the US dollar and war fears. Britain's blue chip shares fell below 3600 before closing at 3603.7, an 18.5-point decline.

With pensions and many other savings schemes tied into the stock market, indirect investors were also left nursing their losses.

After ten days of falling share prices, £88.7bn has been wiped from the value of savings.

Most investors had been hoping for some form of rally. In the end it failed to materialise.

Data from the Office for National Statistics (ONS) gave early promise by suggesting the UK economy grew by 1.7 per cent last year, the lowest annual rate for a decade.

The news provides a fillip for Chancellor Gordon Brown who now looks on course to meet his revised target for UK growth for 2002.

But the feelgood factor was short-lived. Strong selling in the afternoon sparked market rumours that some of the big insurance companies had begun to lighten their portfolios.

Martin Dobson, head of dealing at NatWest Stockbrokers, said: ''We are likely to see further weakness. We have not got anything to give this any upward momentum.

"Until we have got the UN weapons inspectors' resolution on the Iraqi situation we are liable to drift. It could still drift on after that."

The day's biggest driver of negative sentiment was a dramatic decline in the dollar on world markets in the face of the growing threat of war. The greenback slumped nearly a cent to 1.6321 dollars, a three-year low against sterling and the euro.

Share prices traded in narrow limits for much of the day. By the close of trading dealers were glad to have escaped a more severe hammering.

Hilary Cook, chief market strategist at Barclays Capital, said: ''Closing under 3600 would have been very disappointing and ten down days is bad news. It is a big level in terms of charts and fundamental analysis.

''This highlights the fact that people are just prepared to sit on the sidelines. They are watching the war and not the Footsie.''

Looking ahead to next week, dealers are waiting to see what the UN's chief weapons inspector Hans Blix will say in his report on Iraq.

US President George W Bush is due to make his State of the Union address on Tuesday which is expected to be tough, jingoistic and uncompromising, heightening war fears and dampening shares.

Strategists regard 3500 as the next critical level for the Footsie. If stocks fall below this benchmark, life insurance companies will be forced to sell some of their massive shareholdings in order to prop up their balance sheets.