FTSE 100 enters bear market as sell-off continues

The FTSE 100 has entered bear market territory, having now fallen 20% from recent highs after the index lost as much as 5% in early trading on Tuesday.

After an initial bounce, the FTSE 100 stood over 5% lower at 4,796 shortly after 9:30am, before recovering later in the hour and strengthening over the rest of the morning. By 12::30pm the index had recovered all the day's losses to reach 5,069.

The low point marks a fall of over 20% from the index's recent peak of 6,091, reached in February 2011. The common definition of a bear market is a 20% fall over a period of at least two months.

Trading in Europe mirrored the pattern seen in the UK, with early resilience in France and Germany giving way to significant falls. At the lows, France's Cac 40 was down 4% at 3,000, with Germany's Dax down 6.4% at 5,544.

The Dax and the Cac entered bear markets on Monday, as did the Stoxx Europe 600, and number alongside the Swiss Market Index and Spain's Ibex index as indices that have fallen 20% from their February peaks.

US indices remained outside bear market territory prior to the open on Tuesday. The S&P 500 index has lost 17.9% since its 29 April high of 1363.6, the Dow Jones industrial average is down 15.6% from its peak and the Nasdaq is down 18%.