UK stocks closed at the lowest level in more than five years yesterday as investors grew increasingly concerned that a recession in the United States and other major economies will be deeper than expected.

The London market's benchmark FTSE-100 Index shed a further 94.03 points, or 2.4%, to 3780.96, the lowest since April 2003, bringing the week's slump to 11%.

"It seems abundantly clear that any talk of recovery is rather premature," said Jimmy Yates, a senior trader at CMC Markets. "Even the idea of trying to pick up some bargain priced stock does not seem to be tempting buyers back in."

British investors were spooked by a report from investment bank Goldman Sachs that said the US recession would be deeper than it had previously predicted, with gross domestic product likely to drop at an annualised rate of 5% in the current quarter and the unemployment rate reaching 9% by the end of 2009 from 6.5% last month.

Share prices in European markets ended lower after fresh economic news indicated that eurozone demand had plunged and central bankers weighed the bleak prospect of deflation. Fresh fears over the financial sector knocked down banking shares.

Germany's DAX was down 2.2%, while the CAC-40 in France was fell 3.3%,.

Earlier, Asian markets recouped early losses in the wake of Thursday's big sell-off on Wall Street to end up in positive territory. In New York, Wall Street stocks bounced up and down in choppy trading. The Dow Jones Industrial Average ended 494.13 points higher at 8046.42.

Citigroup shares tumbled for a fifth straight day, as chief executive Vikram Pandit tried to downplay speculation the banking group might sell major businesses to restore investor confidence.

Pandit told employees that Citigroup, the second-largest US bank by assets, does not want to change its business model and plans to keep its Smith Barney brokerage.

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