Recent positive economic news from the US and Europe was ignored as the ripple effects from Enron's collapse continued to be felt last week.
It meant another tough five days for global markets as investors also focused on the latest rogue trader scandal from Allied Irish Bank. The FTSE World index lost 2 per cent.
In the US, market sentiment was again driven by a sense of unease and scepticism over corporate accounting practices. General Electric, the world's biggest company, came under scrutiny about the transparency of its accounting. Tyco, the beleaguered conglomerate, continued to suffer after being downgraded by Standard & Poor's.
Wall Street did manage to halt a five-day losing streak on Friday after bargain-hunters snapped up financial, telecom and tech stocks.
Earlier that day, a boost was also provided by upbeat economic data from the US Commerce Department, which reported that inventories had fallen for the seventh consecutive month.
Europe, which hit a three-month low on Wednesday, ended a poor week on a steadier note as good news from Electrolux and Pirelli outweighed continuing dull sentiment elsewhere.
Alliance led the gains in the insurance sector as the German group posted full-year profits in line with analysts' estimates while forecasts for the coming year beat most expectations.
A three-day sequence of losses was brought to a halt in London on Thursday by a buoyant telecom sector but only after the Footsie was driven down towards the 5,000 level.
The blue-chip index ended a week which saw the Bank of England leave the base rate at 4 per cent, down by 1.2 per cent at 5,128.1.
Although the Japanese market ended the week lower, talk of international pressure on Japan to resolve the banking crisis saw the troubled sector soar late in the week, helping the broader market rebound from an 18-year low.
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