Johnston Press , the regional newspaper group, was hit by a bear raid yesterday. Its shares dropped 7.3 per cent to a nine-year low of 169½p on talk it could breach banking covenants if the advertising market slows sharply.

News that a US mortgage lender had defaulted on a payment and that foreclosures had reached a record high pushed the FTSE 100 down 87.1 points, or 1.5 per cent, to 5,766.4. Banking stocks were among the biggest fallers. Barclays lost 4.6 per cent to 427p, while Royal Bank of Scotland shed 3.9 per cent to 341¼p and Alliance & Leicester lost 3.6 per cent to 524½p.