The FTSE 100 marked the 80th anniversary of the Great Crash of 1929 in fitting fashion, dropping by more than 2 per cent.

The blue-chip index was already under pressure amid losses for miners and financial stocks, before a weak opening on Wall Street — after an unexpected fall in new home sales in September — further unnerved investors. The FTSE closed 120.55 points down at 5,080.42.

Prudential was the biggest faller, sliding 60p to 550½p, even though the insurer reported a 9 per cent decline in third-quarter sales that was better than expected. Elsewhere in the sector, Aviva fell 22.7p to 397.8p and Legal & General slid 4.85p to 77.7p.

Xstrata led the mining sector lower, dropping 91½p to 882p amid concerns about demand for commodities, with copper hitting a one-week low. Kazakhmys, which announces production figures today, fell 111p to £11.13 and Rio Tinto dropped 197p to £26.73.

The bailed-out banking sector continued to fall amid fears about what measures the European Commission will impose on institutions that received state aid, with Royal Bank of Scotland easing 1.2p to 39.6p and Lloyds Banking Group, which is also said to be on the verge of a fundraising, 3.84p weaker at 80p. The sector has suffered heavy losses this week after ING, the Dutch group, said that it would split itself in two as part of a deal with Brussels.

Vodafone was one of only 12 blue-chip risers, closing 0.45p up at 138¼p, after Bernstein, the investment research firm, said that it thought the mobile phone group’s European businesses would perform much better in 2010 than investors fear and that the stock was one of the most compelling buys in the sector.

BT Group outperformed the market, easing only 0.1p to 133.40p after Barclays Capital started coverage on the telecoms business with an “overweight” rating. The broker believes that there will be a material benefit from the company’s costcutting programme and that regulatory developments such as Digital Britain should secure BT’s position in next-generation access. There was also an upbeat note from Bernstein.

British Airways fell 10.4p to 183.30p after a downbeat note from Société Générale ahead of its first-half results due next Friday.

In the FTSE 250, Laird dropped 19.2p to 180p after confirming a report in The Times that it would hold a rights issue, raising £89 million to pay down debt. The group, which makes antennae for mobile phones, also brought forward a trading statement, in which it said there had been signs of improved trading in the third quarter. It added that market conditions remained extremely challenging and demand was hard to gauge.

William Hill fell 4.1p to 167p despite a “buy” note from Daniel Stewart, which said that the bookmaker was exceptional value at present levels. The broker said that it would welcome a mooted bond issue from the group — for which it got a credit rating this week — saying that demand would be strong. The company is said to have organised an investor roadshow already to drum up interest.

• New York: The Dow Jones industrial average slid 119.48 points to close at 9,762.69 as disappointing data on home sales fed investors’ worries about economic revival.

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