Fears that Autonomy, the software company, was about to become the next victim of the credit crunch drove it down nearly 15 per cent despite in-line results.

Roger Phillips, analyst from Evolution, slashed his target price to 700p after management revealed that customers had begun delaying payments and sales were becoming harder to close. The company, until now seen as offering a safe haven from the down-turn, told analysts that “a few million dollars” had been knocked off revenue in the past quarter as cash-strapped clients stopped paying licence fees and took up lower monthly rental fees.

The 146p fall to 844p still left the group on a very bullish 31 times this year’s forecast earnings. “We do not understand why a US-focused software vendor with massive operational gearing is rated so highly,” Mr Phillips said.

The FTSE 100 dived 131 points through the 6,000 mark in the morning but later rallied with a rising Wall Street and ended down 32.9 at 6,050.7.

The biggest faller was Eurasian Natural Resources, the Kazakhstan iron ore and ferrochrome miner, down 7¾p to £13.10 after ABN Amro said that the shares had got ahead of themselves given the uncertainty about whether it would bid for Kazakhmys and the threat of metal export duties.

A rebounding dollar meant that metals prices fell from recent highs and the mining sector as a whole fell with the copper miner Antofagasta losing 42½p to 808½p, despite vague talk of Chinese stakebuilding interest.

A stronger dollar also helped the oil price to ease and this benefited BA, up 7¾p to 212¾p. But there has also been talk of Middle Eastern interest and rival easyJet still lost 2½p to 288p. Thomas Cook lost another 14p to 257½p on fears that its deal to sell its Condor airline to Air Berlin would collapse. Cazenove downgraded Cook and Tui Travel, down 6½p to 232p, on rising fuel costs and a stronger euro.

Drax, the coal-fired generator, out-performed the sector, up 9½p to 627½p on talk of predatory interest. Centrica, up 2¼p at 295½p, is seen as a contender.

Next fell 43p to £10.73 as Nick Bubb, of Pali International, said that a trading statement next week could show a 10 per cent fall in sales in the past three months. Next was also hit by ONS figures that showed the worst clothing sales on the high street for a decade.

Persimmon lost 41½p to 608½p after it said that a slump in demand meant it would stop building new homes. Barratt Developments fell further, 36¾p to 294¼p, on rumours that it might have to launch a rights issue to refinance its £1.74 billion debt racked up in its purchase of Wilson Bowden at the top of the market.

Game Group, whose shares have been buoyed recently by the launch of a range of new titles, lost 10¾p to 249¼p after Altium cautioned that its stores would have to be boarded up if Sony and Microsoft moved to sell games over the web.

Black Rock Absolute Return Strategies, a fund of hedge funds, was unchanged at £10.10 after its float. It raised $275 million – nearly half its $500 million target.

— New York: Stocks rallied as investors focused on a fall in unemployment claims and stronger than expected results from Ford rather than weak housing figures. The Dow Jones industrial average closed up 85.7 points at 12,849.00.

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