THE FTSE 100 Index fought back from below the 4000 barrier yesterday in the wake of figures confirming the official start of the UK recession.

The FTSE 100 recovered from a fall of nearly 100 points to close down nearly flat, off 0.2 at 4052.5 – despite figures revealing the UK economy contracted by 1.5 per cent in the fourth quarter of last year in the worst performance since 1980.

Yesterday’s figures from the Office for National Statistics showed the plunge was sharper than forecast, sparking fears of a deep and prolonged recession.

The pound also suffered a fresh slump – down to its lowest level against the dollar since 1985, although it later recovered a little to stand at $1.37.

Barclays was one of the heaviest fallers in London, down for a ninth session in a row by 8p to 51.2p, amid continued fears that it will have to raise more capital.

Among rival firms, Lloyds Banking Group rose 0.2p to 49.3p and HSBC dropped 11½p to 515½p. Royal Bank of Scotland was 0.1p lower at 12.1p.

Insurers were also struggling due to ongoing worries over capital requirements and ahead of trading updates due this week. Aviva was off 19p at 264p, while Legal & General shed 3.4p to 55.4p and Prudential fell 18p to 288½p.

Elsewhere, Sainsbury’s rose 2.25p to 302¾p, while Tesco was up 6.6p at 356½p.

Morrisons recovered from Thursday’s weak session to climb 5¾p to 258½p. Its shares dropped in the previous session despite posting industryleading sales figures for the Christmas period.

One of the biggest declines in the FTSE 250 Index came from Barratt Developments after Citigroup cut its recommendation on the housebuilder to sell. Shares dropped nearly 17 per cent, or 13¼p, to 66¼p.