Investors were urged to sit tight as the FT-SE 100 closed at a new seven-and-a-half year low, wiping £39 billion off the value of leading shares.
Financial advisers yesterday told clients to stay calm and not cash in their investments, despite the top-flight index closing 165.7 points down at 3287.0.
Nikki Foster, savings and investment manager at Chase de Vere, said: "We are saying the same to our clients as we always do - try not to panic and sit tight.
"The last thing you want to do is cash in your investments because then you won't be invested in the market when it recovers."
Now was a good time to buy shares as values were so cheap.
Robert Guy, of Timothy James and Partners, said: "From what I can tell this looks like the last bit of war nerves driving the market down.
"If you have ridden it all the way down from 6000, I wouldn't let today's activities sway you."
Investors in technology funds should cash in as this was the only area he could not see coming back.
But the falls were further bad news for company pension funds, which are finding it increasingly expensive to offer final salary schemes.
The National Association of Pension Funds estimates about £10.8 billion could have been wiped off company schemes in yesterday's fall. But it stressed pensions were a long-term investment and people should not panic.
A spokeswoman said: "Short-term changes in the market level out in the long run."
The falls in share prices were also bad news for people with endowment mortgages, many of whom are already facing a shortfall when their policy matures.
The Association of British Insurers urged policyholders to remember endowments were a long-term investment.
Thursday March 13 2003
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