So that’s it then. Monday and Tuesday was a two-day suckers’ rally. Our banks may be safe from imminent collapse, but that does not mean that the world can avoid a recession, particularly when three mining companies talk about delaying deals because of falling metals prices and tighter credit.

All sectors were on the slide as the FTSE 100 fell 314.62 points to 4,079.59, but the FTSE 350 miners bore the brunt, losing 17 per cent, or £16 billion in value. Xstrata, the copper miner in South America, was among those hit hardest, down 258p at £10.58, amid talk that Glencore, the Swiss-based metals trader that is its founding 35 per cent shareholder, may have to sell down shares to raise cash. On Tuesday Standard & Poor’s cut its rating on the privately owned group, noting its high debt, falling metals prices and the fact that the value of its Xstrata holding had fallen 62 per cent from $22 billion in less than four months. Glencore may be regretting its refusal of £40-a-share offer for Xstrata from Vale, of Brazil.

Rio Tinto, down 469p at 746p, sparked the global equity sell-off by giving warning of a slowdown in China, which is seen as the last prop of the global economy. Rio is delaying a $10 billion disposal programme — but Vedanta Resources, the Indian miner, down 154½p at 746p, added to worries by blaming the credit crunch for apparently pulling its bid for Asrarco. the American copper miner.

Exane BNP Paribas analysts said that factories in Russia and China were bearing the brunt of the credit squeeze, which “will force high-cost \ players to close capacity fast. The weakest new projects should also get wiped out quickly.” It downgraded a raft of miners facing high costs on big new mining projects, including Anglo American, down 334p at £13.26 and Antofagasta, down 51¼p at 290¼p.

The biggest fallers were Eurasian Natural Resources (ENRC), the Kazakh miners, and Kazakhmys. Both supply Russia and China and have spent heavily on new mines. ENRC fell 130p to 386½p, while its compatriot slid 96½p to 336¾p.

Standard Chartered, which is highly geared to the Chinese and Hong Kong economy, fell 158p to £11.68. HSBC, until now relatively immune from the credit crisis but with big Chinese exposure, fell 55½p to 803½p.

British Airways slipped 9.8p to 119.1p as Invesco, its largest shareholder, sold down its stake amid fears that its pension deficit could scupper a merger with Iberia. Thomas Cook, up 2.2p at 189.2p, and HBOS, up 0.4p to 85.7p, were the only blue-chip gainers. Lloyds TSB lost early gains and closed down 1.1p at 150.2p as analysts dismissed talk that it would be allowed to pay dividends, after all.

Ferrexpo, the Ukrainian iron ore miner, fell 16¼p to 83½p as it said that it was delaying a decision on investing in its undeveloped iron ore deposits — an indication that finding a partner to invest was taking longer than expected. Oil service groups targeting oil sands extraction were hit as the oil price touched a 13-month low. Weir Group fell 92½p to 450p and John Wood dropped 35¼p to 225p.

- New York: Wall Street responded to news of falling retail sales and the Fed’s assessment that the economy had continued to slow in early autumn by sending stocks plunging. The Dow Jones industrial average closed 733.08 points down at 8,577.91.

Explore Markets

• United States

• Europe

• Japan

• China

• Russia

• The Gulf

• India

• Africa

Times Recommends

• Lies and cover-up at MG Rover exposed by report
• High oil prices push manufacturing costs up
• Primark founder steps down as chief executive