FTSE 100 At Lowest Close Since July 2012

The FTSE 100 has plunged to its lowest closing level for three-and-a-half years amid the latest global stock market rout.

London's leading share index saw £35bn wiped off the value of its constituent companies as it fell 135 points to 5537, its lowest level since 25 July 2012. Insurers and global banks were among the big losers.

Global markets took a fresh dive amid heightened concerns over the state of the world economy - with US Federal Reserve chair Janet Yellen on Wednesday admitting evidence of greater risks , despite the Fed raising US interest rates in December citing a rosy outlook.

Other central banks - including the European Central Bank and the Bank of Japan - have been cutting rates to try to stoke economic activity.

Sweden's central bank on Thursday became the latest to adopt a negative interest rate, citing weak inflation and an increased threat from the world slowdown.

Ms Yellen admitted - in a second day of testimony to Congress - that even the Fed would need to "be prepared" for the possibility of negative rates, even though she did not currently see this as likely.

Markets are jittery about the glum outlook which is causing central banks to consider more stimulus.

Gold (Other OTC: GDCWF - news) saw a boost as investors fled from risky stocks to pile into the safe-haven commodity, helping it climb to its highest level in a year and driving strong gains for UK-listed gold miners Randgold and Fresnillo (Other OTC: FNLPF - news) .

In stock markets, Germany's Dax fell 2.9% while France's Cac 40 slumped 4%. Italy's MIB ended 5.6% lower as investors fretted over the capital positions of its banks amid continued talk of threats from toxic loans.

New York's S&P 500 finished 1.2% lower though this represented a recovery after it had seen steeper losses earlier in the session.

In Europe, Deutsche Bank (Other OTC: DBAGF - news) , which has been battling to reassure investors on its financial health this week, closed 6% down on Thursday while the share price of French lender Societe Generale (Swiss: 519928.SW - news) was off 13% following the release of its latest results.

The latest world sell-off has been attributed to Ms Yellen's testimony to a Congressional committee on Wednesday in which she talked of threats emerging this year from the economic slowdown in China and the continued collapse of oil and other commodity prices.

She (Munich: SOQ.MU - news) said: "This uncertainty led to increased volatility in global financial markets and, against the background of persistent weakness abroad, exacerbated concerns about the outlook for global growth."

Market commentator at Panmure Gordon, David Buik, described the tone of her remarks as "a classic recipe to send investors scurrying to the hills".

The start to 2016 has certainly proved a horror show for stocks and therefore pension fund values.

The FTSE is currently 11% down on its year opening.