Global panic selling took hold of London yesterday, with the FTSE 100 crashing 250.4 points through the 6,000 barrier and every single blue-chip stock ending down.

The index was off all day after falls in Asian stocks overnight. But the sell-off accelerated towards the close as Wall Street began to slide after dismal new house build figures in the US. That left the FTSE 100 at 5,859.9.

Miners and financials bore the brunt, triggered by fears over a looming credit crunch and plunging metals prices, as hedge funds with aggressive bets on rising commodity prices began to unwind them.

Antofagasta, the Chilean copper miner, lost nearly 11 per cent, or 75p, to 608p, while the platinum miner Lonmin was off 290p at £27.92. It has now lost a third of its market value in just over a month. Anglo American dived 255p to £24.70, Kazkhmys fell 99p to £10.71 and Vedanta Resources lost 137p to £14.98.

Standard Chartered was off 118p at £14.44 and the buyout group 3i dived 74p to 979p.

One senior trader said: “This is an über-unwind – hedge funds are getting out of all the aggressive long bets they placed on currencies and commodities. The next to go will be the oil price, which was recently at an all-time high. It’s a myth that London is a safe haven. It’s heavily exposed to oil, mining and bank stocks.”

Some banks have now fallen so low that they are trading at near to their underlying asset value. Northern Rock, down 28½p to 659p as Shore Capital added its weight to a raft of broker sell notes, is only 1.1 times its assets and there are said to be big buyers waiting in the wings until after the bank reporting season.

Analysts at Barclays Wealth were brave enough to recommend that clients buy HSBC, down 22p at 861½p, and Man Group, the hedge fund manager, off 40¼p to 446¾p, saying both should be resilient to the asset-backed credit crunch.

British Energy was another big faller, losing 36¼p to 417¾p despite increased first-quarter profits. United Utilities was relatively unscathed, down 2p at 633½p.

Fears are growing about what would happen if Delta Two dropped its 600p-a-share bid for J Sainsbury, down 31p to 512½p. Nick Bubb of Pali International believes there is only a 40 per cent chance that a deal will be done and that the supermarket’s shares could fall as low as 435p if Delta walks away.

DSG was down 4.7p at 153½p as Dresdner Kleinwort speculated that a trading update at the end of the month could be positive but that John Browett, the new chief who takes the helm in December, would cut the dividend to invest in overseas expansion.

AstraZeneca lost 52p to £22.78 despite ABN Amro upgrading its recommendation from sell to hold with a price target of £25.05, saying that a big cost-cutting plan after the MedImmune acquisition should drive earnings growth.

New York: Markets ended mixed after the Dow Jones industrial average pared back falls of more than 300 points in earlier trading as nervous investors were pummelled by more bad news on the housing and mortgage sectors. The Dow finished down 15.70 points at 12,845.80, the blue-chip index’s sixth straight day of losses.

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