FTSE 100 falls 4%

Stock markets around the world have been in turmoil in recent days on fears that the crisis in the US housing market could undermine the global economy. 

The FTSE 100 fell more than 4% in a single day on Thursday.  It is feared that a squeeze on credit - the amount of money circulating in the banking system - could hurt companies and consumers.

Investors have had a white-knuckle ride in the past week with more than £127bn wiped off the value of the UK's top 100 publicly listed companies in a matter of days.

Thursday's 4% fall was the single largest daily drop since March 2003.

Despite the FTSE 100 bouncing back above the 6,000 mark on Friday, analysts have warned investors to expect continued turbulence as the extent of the credit problems affecting banks and their wider economic implications becomes clear. Investors worried about further falls always have the option to sell their shares for cash.

But investment experts advise that shares should be seen as long-term investments and decisions should not be made on the basis of daily, or weekly, fluctuations in value.

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