The 14th anniversary of the crash of 1987 brought with it another gloomy session on London's equity market, with the FTSE 100 taking another hard look at the 5,000 level and all the main indices losing ground.

At close of trading, the FTSE 100 index only just avoided a three-figure decline, eventually settling 98.3, or 1.9 per cent, lower at 5,017.7. At its worst of the day, it fell to 5,003.9.

The worst performance in the main indices came from the Techmark 100 which retreated 38.69, or 2.8 per cent, to 1,322.28. Fair value for the FTSE future is around 26 points over cash.

Over the week, the FTSE 100 fell 2.5 per cent, the 250 1.1 per cent, the SmallCap 0.9 per cent and the Techmark 100 0.8 per cent. Probably the most potent reason for the slide was unease at the continuing war on terrorism and the anthrax scares which have spread around the globe, yesterday affecting the UK Parliament.

But there was more bad news from abroad, where the German Ifo business climate index, one of the most closely watched barometers of German economic activity, came in much lower than expected.

On the domestic front there was the expected rationalisation plan from Rolls-Royce, the aero engines manufacturer, which included 5,000 job losses.

London took its cue from another downside performance from Wall Street overnight, where the Dow Jones Industrial Average finished another 69 points lower. The expiry of index options in mid-morning did nothing to halt a gradual deterioration of sentiment in the market-place.

Some strategists still preach caution. Tony Jackson, at ING Barings Charterhouse Securities, insisted gains earlier in the week were "a bear rally, nothing more; we take 5,200 to be the top of the present trading range". Gareth Williams at ABN Amro said: "Caution remains warranted with respect to UK equities. While the UK has arguments in its favour relative to other markets, our concern over equity ratings suggests investors should chase a rally with care."

Turnover in equities was 1.85 billion shares.