The blue-chip index has now fallen back into negative territory, sliding 0.4pc. The FTSE 250 has dipped 0.6pc.
Mining stocks are still in the doldrums following a continued sell off in base metals. Kazakhmys has fallen almost 5pc and Xstrata is down 4.3pc.
Defensive shares dominate the leaderboard as dealers look for safe havens for their capital. Vodafone, for example, has risen 1.5pc.Imperial Tobacco has also perked up 0.8pc.
8:42 FTSE 100 bounces following yesterday’s 4.7pc sell off
London shares rallied more than 1pc in opening deals on Friday, clawing back a little of yesterday’s heavy losses after a pledge by the G20 to preserve stability but sentiment remained plagued by global economic worries.
The FTSE 100 opened up 1.2pc but this bounce soon faded index of leading shares flat at 5042.22 within 28 minutes of trading starting.
Radhika Rao, economist at Forecast PTE in Singapore, said:
The statements might offer some sense of calm to regional bourses for the immediate term, though we expect the optimism to wear off soon as focus shifts yet again to realities on the ground: Greece’s ability to receive the bailout funds alongside containing contagion debt risks out of the euro zone. In light of underlying political and economic differences, it’s probably each one for their own.
Miners continued weigh on the index after copper extended its losses in another sell-off on Friday to hit its lowest in more than a year, putting it on course for its steepest weekly loss October 2008 amid a bleak outlook for the global economy.
Copper miner Antofagasta fell 3.4pc, Xstrata lost 3.1pc andKazakhmys dropped 3pc.
Defensive stocks such as Vodafone and Unilever were up around 1pc.
Banks also rose after the G20 economies vowed to mount a powerful response to the rising challenges facing the world economy and to support European banks, with HSBC and Lloyds gaining 1.26pc and 1.3pc respectively.
The G20 statement said:
We commit to take all necessary actions to preserve the stability of banking systems and financial markets as required. We will ensure that banks are adequately capitalised and have sufficient access to funding to deal with current risks and that they fully implement Basel III along the agreed timelines.
06.30 Asian markets claw back losses after G20 pledge
Asian stocks fell to a 16-month low and emerging market currencies tumbled on Friday amid fears of a global recession, but a pledge from the G20 to preserve financial stability helped stem the scale of losses.
Equity markets pulled back from the depths of their slump and the euro gained after statement late on Thursday committed the Group of 20 major economies to “take all necessary actions” and said central banks stood ready to provide liquidity.
The finance officials of traditional economic powers such as the United States, Japan and Germany and major emerging nations such as China want to demonstrate strong resolve in the hope that it will calm jitters that had sent financial markets down sharply.
The G-20 joint statement said:
We are taking strong actions to maintain financial stability, restore confidence and support growth. We commit to take all actions to preserve the stability of banking systems and financial markets as required.
Alarm at the US Federal Reserve’s dire outlook for the world’s biggest economy at its two-day policy meeting this week added to worries over the eurozone debt crisis and signs of slowing growth in China pushed world stocks to 13-month lows as investors shed risky assets from portfolios and scurried to safer havens.
Hong Soon-pyo, a market analyst at Daishin Securities in Seoul, said:
There is not much progress so far in Europe, and we are only hearing bad news on both the credit and economic fronts right now.
MSCI’s broadest index of Asia Pacific shares outside Japan was down 1.8pc, having earlier fallen as much as 3 percent to its lowest level since May 2010. Markets in Japan were closed for a holiday.
Hong Kong’s Hang Seng was down 1.2pc a day after tumbling nearly 5pc. South Korea’s Kospi remained unsettled, plunging 5.7pc, while Australia’s S&P ASX 200 slippeed 1.56pc.
Investors headed for the exits on Thursday as they gave in to fears that a global recession was already under way. Selling started in Asia, picked up speed in Europe and sent Wall Street near its worst finish of the year.
The Dow Jones fell 3.5pc to close at 10,733.83. It was the second consecutive rout in the stock market since Wednesday afternoon, when the Federal Reserve announced a change in strategy for fighting the economic slowdown – a bid to lower long-term interest rates and get people and companies to spend more money.
The Standard & Poor’s 500, a broader measure of the stock market, and the Nasdaq composite, which is more heavily weighted with technology stocks, both fell more than 3pc.
Economic news was bad around the world. A closely watched PMI survey in Europe indicated a recession could be on the way there, and a manufacturing survey suggested a slowdown in China, which has been one of the hottest economies.
The Fed announced on Wednesday that it would shuffle $400 billion of its own holdings in hopes of reducing interest rates on long-term loans, a plan known as Operation Twist. The central bank hopes that if people and businesses are able to borrow money more cheaply, they will spend throughout the economy and give it a lift.
However, the Fed announcement troubled investors because it came with a bleak assessment of the future. The Fed said it sees “significant downside risks to the economic outlook,” including volatility in overseas markets, triggering the global sell-off.
In Britain, the FTSE 100 eventually closed down 246.80 points at 5041.61 – the index’s biggest one day fall since March 2009 – and theFTSE 250 plunged 377.74 points to 9888.26.