The FTSE 100 Index slumped below the 4,000 barrier yesterday as the London market took another dive.

The blue-chip index ended the day at its lowest closing point since December 1996 after falling another 229.60 points to reach 3994.50.

The latest decline follows five successive falls last week, wiping 391 points or £93 billion from the value of the index.

Blue-chip stocks had been in negative territory for most of the session but the slide accelerated on the opening of Wall Street.

The Dow Jones Industrial was 224 points lower as US investors continued to fret over accountancy standards.

Major casualties included oil giants BP and Shell, both down eight per cent, and mobile phone group mmO2, down by almost ten per cent.

The fall took five per cent off the value of the Footsie, with the blue-chip index now almost 3,000 points lower than its position at the start of 2000.

Alex Scott, analyst at Seven Investment Management, said the latest slide was purely confidence-driven in the wake of accountancy concerns in the United States.

He said: "Blue-chip companies are being sold off on the basis of very thin news flow. There's been nothing in London that would justify this sell-off in terms of corporate or economic news."

Mr Scott said the market's slump below the 4,000 mark had come as no surprise after the steady sell-off in recent weeks.

Analysts had been earlier hoping for a solid start in the United States after the corporate sector was boosted by American drug giant Pfizer's announcement it was snapping up rival Pharmacia in a £38 billion deal.

But the deal failed to provide any inspiration as the sell-off continued ahead of a busy week for second quarter earnings in the United States.

David Buik, of financial bookies Cantor Index, said: "The drops in 1987 and 1997 were severe, sharp and very clinical. This year's drop has been slow, painful and difficult to quantify."