FTSE hits eight-month low as trading closes

The FTSE 100 Index has lost 79.8 points to close at a fresh eight-month low of 4771.9.

The main drag in London was from heavyweight banking and financial stocks.

Abbey National was one of the day's heaviest fallers, losing 38p at 858p.

The group is enduring a gruesome week and today's close means it has now sunk to levels not seen since September 2000.

Lloyds TSB lost 17p at 673p amid market rumours it was gearing up to lower dividends, while HBOS was 31p weaker at 744p, Royal Bank of Scotland shed 55p at £18.80 and Barclays eased 12p at 562p.

Insurers under pressure included Prudential, down 22½p at 564½p, CGNU, off 21½p at 549½p and Royal Sun & Alliance, which lost 6p at 264p.

The tech and telecom sectors had for most of the session been edging forward, but as the Nasdaq slid, so did the UK stocks.

MmO2 lost ¾p at 38p, Cable & Wireless fell 3½p at 191p and BT was off 3½p at 271½p.

Sage shed 3p at 165p as it prepared to become the sole tech stock in the top flight after ARM and Logica were demoted last night.

They join the FTSE 250 on June 24, and today ARM lost 2½p at 163p and Logica was 7¾p weaker at 212½p.

But British Airways gained 5p to 204½p, a 3% rise fuelled by reports it will cut fares on European routes later this month.

And Goldman Sachs increased its price targets on European tobacco stocks, meaning Gallaher gained 4¼p at 646p, British American Tobaccos was ahead 10p at 790p and Imperial Tobacco put on 2p at £11.20.