MORE than £70bn was wiped off the value of blue chip shares yesterday, as the London market suffered its worst one-day fall since the 9/11 terror attacks.

Yesterday's losses mean that the FTSE was down nearly 14 per cent on this year's opening mark - the worst start to a year since records began in 1935.

The fall came as fears of a recession in the US intensified.

Traders described the losses as "incredible", with the FTSE 100 Index plummeting by as much as 330.7 at one stage It closed down 323.5 points at 5578.2, almost equalling the 324- point fall seen the day after 9/11 and taking the index to its lowest level in 18 months.

The drop continues an unprecedented slide in the top flight index.

Hefty overnight falls in Asian markets set the scene for the decline.

Losses for the Dow Jones Industrial Average on Wall Street last Friday sparked the sell-off after investors were left unimpressed by President George Bush's plans to stimulate the allimportant US economy.

Rumours yesterday that Bank of China may become the latest to reveal a financial blow from the collapse of America's subprime mortgage market also tested investor nerves, according to experts.

Martin Slaney, head of derivatives at GFT Global Markets, said: "The punches just keep coming. It's difficult to see where the turning point will come. With investors already pricing in a quarter-point cut in interest rates in the UK, it appears as though the usual fiscal stimuli are insufficient, as this can create an impression of panic."

Heavily-weighted banking and mining stocks were worst hit, as concerns over a US economic slowdown gathered pace.

Richard Hunter, head of UK equities at broker Hargreaves Lansdown, said investors in London were "battening down the hatches"

as US recession fears gripped the market.

He said: "People aren't buying the US bail-out story and that feeling has been exacerbated by the weakness in the Asian markets.

"The other thing we have seen is a lack of buying interest - people are battening down the hatches while they see what happens in the US."

Last week, the FTSE dipped below the 6,000 barrier for the first time since August.

On Friday, President Bush unveiled plans for a package of measures worth billions of dollars to help the US economy.

Analysts are worried that the proposals will do little to boost consumer spending in the US.