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London started the day with further falls, following drops last night in New York and in Asia.

At 9:08AM GM, the FTSE 100 was at 4,027.29 – a fall of 38.20 points or 0.94 per cent – after dropping below 4,000 in early trading.

Much of the attention of traders was taken by falls last night in New York.

The Dow Jones dropped 7.70 per cent to 8,149.09 – with the banks leading the drop.

Citi Group was down 22.20 per cent, Bank of America dropped 20.92 per cent, AIG slipped 17.91 per cent and JP Morgan Chase slid 17.50 per cent.

In Asia overnight, the Nikkei was down 6.35 per cent and the Hang Seng was down 4.98 per cent.

Drops this morning in London followed a 5.19 per cent fall last night.

Tom Hougaard, at City Index, this morning before markets opened predicted a 100 point drop for the FTSE 100

"And so in the end logic prevailed," he said.

"It is rare that logic prevails in the market, but why should the Thanksgiving shopping spree be anything but disappointing? And the Dow gave its verdict last night, and Asia is giving its verdict right now. It is a sea of red.

"We already lost significantly here in Europe yesterday but we are still being called lower."

However, he expected the Dow Jones to see a minor recovery.

In London, miners continued to drag the FTSE 100 down.

Rio Tinto was down 6.60 per cent, Anglo American fell 6.00 per cent and BHP Billiton dropped 4.90 per cent.

London Stock Exchange Group fell 6.78 per cent and Schroders lost 5.06 per cent.

Biggest gains went to Tesco – despite a sales slowdown – rising 7.12 per cent to 308.50p.

Royal Bank of Scotland rose 6.02 per cent and Thomas Cook gained 4.62 per cent on good results.