Renewed fears for the world economy pushed the London stock market sharply lower again yesterday and placed it firmly on track for one of its worst weeks in history.

Analysts and traders have begun to talk about a "second leg" to the recession – with an acceleration of the pace of decline rather than any stabilisation.

The FTSE 100 index of leading shares finished down 113.7 points at 3,512.09 , a fresh six-year low. Although less dramatic than Monday's panicky movements, the cumulative 8.5 per cent-plus drop in equity values over 48 hours is among the market's half-dozen worst performances of modern times. The London stock market has seen 10 per cent of its value wiped away since Friday's opening.

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Comments by the US Federal Reserve chairman, Ben Bernanke, that the world could face the possibility of a "prolonged episode of economic stagnation" failed to lift spirits on either side of the Atlantic. The White House economic adviser Christina Romer said that US first-quarter output was looking "pretty lousy".

On Wall Street, a day of gyrations left the Dow Jones Industrial Average down 0.6 per cent at 6,726. The Dow is more than 50 per cent off its record high of 14,164.53 set in October 2007. The S&P 500 ended below the key pschological level of 700 for the first time since October 1996, falling 0.6 per cent to 696.3. Mr Bernanke's downbeat contribution came after more grim news on the US economy: home sales down another 7.7 per cent on the year, much worse than the markets had anticipated.

However, grim as the American situation may be, there seems little chance that the UK will escape its destiny at the bottom of the international league table for growth among the major advanced economies this year.

The Chartered Institute of Purchasing and Supply published its latest survey of the construction industry – and it plumbed new depths. Confidence in the building trade – comprising about 6 per cent of the economy – has hit a fresh record low, and has slumped at an even faster rate than has been seen in recent months.

On Monday, the Cips published similar findings about the state of manufacturing (some 15 per cent of the economy) with a worrying lack of evidence that exports are showing any response to the 25 per cent decline in the value of sterling since mid 2007. In the case of the construction industry, the sickness seems to have spread from the private housebuilding sector to the (until now) relatively healthy civil engineering and commercial areas, where confidence has hit rock bottom.

The Cips surveys are a reliable leading indicator of where real GDP usually goes, and they are tentatively pointing to a UK growth figure for the first three months of 2009 even worse than than in the last quarter of 2008, when the British economy shrank by 1.5 per cent. The Nationwide Consumer Confidence index, up slightly on last month, may be seen as little more than a blip in this context.

Meanwhile, the CBI has repeated its calls for the Government to speed up the implementation of the various support packages announced in recent months. They said the availability of credit to business has "continued to deteriorate" and they expect credit conditions to remain "difficult". The director general of the CBI, Richard Lambert, called on ministers to consider funding an investment corporation, like the Industrial and Commercial Finance Corporation created in 1945, to provide finance to small and medium-sized companies.

Having weathered the earlier part of the downturn last year relatively well, oil and mining stocks came under renewed attack after remarks from the IMF about a depressed long-term outlook for oil and other commodity prices. The fund's managing director, Dominique Strauss-Kahn, said it sees a "serious risk" of a contraction in the global economy this year and will probably cut its 0.5 per cent growth estimate in April.

The Organisation for Economic Cooperation and Development's secretary general, Angel Gurria, echoed his view: "The still unfolding global crisis and recession is deepening".

Romania said yesterday it was considering turning to the IMF for emergency aid, as fellow EU members Hungary and Latvia already have. Investors doubt these nations' ability to fund yawning trade gaps as supplies of regular credit dry up.