Banks lead sharp FTSE 100 falls

Banks led the way downwards in early morning trading this morning, as traders confidence was badly shaken by gloomy economic news.

The index was down 1.73 per cent at 09:41 BST this morning, standing at 5,269.50. This is well below yesterday's close of 5,362.10.

Barclays has suffered a torrid week, following claims the bank needs to raise £7.5 billion to counter potential losses from credit-related writedowns, and suffers again today – down 5.09 per cent to 312.50 a share.

Royal Bank of Scotland also saw a 5.05 per cent drop, to 216.25, following announcements earlier this week the bank was to reorder its ABN Amro Australian division.

RBS is to buy out 23 per cent staff holdings in the company, and the managing director of RBS Australia, Stephen Williams, has replaced Mr James at the helm of the ABN unit.

Lloyds TSB was also down, by 4.10 per cent to 274.50.

Standard Life and HBOS were also among the fallers.

BP saw its share price rise 0.35 per cent, to 507.25, following news it has reached an agreement over the future of TNK-BP with Russian investors.

Next was up 0.74 per cent to 1,090 pence, while British Airways rose 0.40 per cent.

Chris O'Toole