Economic gloom drags down prices

The FTSE 100 Index has fallen another 81.0 points to close at 5086.6.

General economic worries, fuelled by data showing a fall in demand for mortgage lending, added to the gloom in the City.

The European Central Bank did little to lift spirits by keeping interest rates on hold, while the US markets also opened lower.

Banks weighed most on the market in the wake of the mortgage figures from the British Bankers' Association.

Britain's biggest mortgage lender HBOS - the recently merged Halifax and Bank of Scotland - was hardest hit, down 30p at 790p.

It was joined by a number of other financial stocks, including Lloyds TSB off 14p at 712p, Barclays down 49p at £20.99 and HSBC 6p lower at 779p.

CGNU was also heading lower, down 35p at 865p, despite reporting record new business figures boosted by strong pension sales.

Drugs firms played their part in pulling the market into negative territory, with GlaxoSmithKline falling 21p to £18.71 and AstraZeneca down 96p at £31.24.

And Cable & Wireless topped the Footsie fallers' board after receiving a downgrade from Morgan Stanley. Shares slipped 25¼p to 313¾p.

It was joined on the way down by Vodafone, off 4½p to 160¾p, and BT, 11¾p lower at 353¼p.