Shares in London have crashed to levels last seen six years ago after investors took fright at telecom giant WorldCom's bankruptcy and the worries about the health of insurance companies.

By the close on Monday, the blue-chip FTSE 100 index was 202.8 points or 4.95% lower at 3,895.5.

Monday markets, 1759 GMT

London's FTSE closed down 202.8 points Frankfurt's Dax closed down 200.45 points Paris' Cac closed down 174.35 points New York's Dow up 10.45 points New York's Nasdaq down 9.28 points New York's S&P 500 down 6.8 points Tokyo's Nikkei closed down 13.35 points

The last time the FTSE was this low was 6 September 1996.

Markets elsewhere in the world plunged deep into the red too, with Frankfurt and Paris both ending near record lows - although Wall Street investors started buying back shares in the afternoon, either to sell them on at a quick profit or to fulfil options deals established earlier in the day.

Investors remain pessimistic after weeks of corporate scandal and signs that big business profits remain far from recovery.

Gloom

London's slide was fed not only by the bad news for WorldCom and the general gloom, but also by fears that the continuing slide will hurt insurers' ability to cover claims.

The result was a near-10% fall for the UK's Aviva and almost 8% for Prudential.

Oil stocks were also under assault following the removal of Shell's Dutch partner from the US Standard & Poor's 500 index.

Shell was down 9.3%, while weak oil prices made sure BP also lost ground, finishing 7.9% down on the day.

Sentiment

The nervous opening followed a dismal week which had seen hundreds of points wiped off most major indices, with Friday alone producing a near 400-point fall on the Dow.

The dour mood was confirmed by news that telecoms giant WorldCom had filed for protection from its creditors barely a month after admitting to overstating its profits by $3.8bn.

On the bounce

Last week's worldwide stock market falls, the culmination of a two-month slump that has wiped up to one-quarter of the value off the world's top companies, came despite some positive corporate news.

Giants such as Coca-Cola, Ford and IBM all reported solid profits last week.

But traders' attention was focused on news that Johnson & Johnson may be suffering accounting problems at a Puerto Rican plant.

How this crash compares

There have been far worse "bear" markets Four crashes in 1987 and 1929 saw more than 10% wiped off markets in one day The Wall Street Crash of 1929 did not see recovery until 1954 Click here for more

"If they're focusing on little bits of bad news, and ignoring big bits of good news, then there's no hope," one New York trader commented.

Appetite for gloom

The chances of a turnaround any time soon still look slim, observers said.

"Investor sentiment is still bearish," said Graham Secker, UK equity strategist at Morgan Stanley.

"People are still concerned about what's going on (with the economy). It's going to take a while before faith in the market is rebuilt.

"We are entering the UK reporting season so the trend for the next three months could be set by that."