Footsie falls on banking stocks

The Footsie 100 Index was down 42.1 to 4033.3 in the first hour of trading.

Banking stocks heaped pressure on the London market for the second session running, as the index continued its descent.

The Footsie had been sitting comfortably during November but the new month has brought little in the way of festive spirit as the blue-chip index again slipped, easing in the first hour.

On Wall Street, confidence has been sapped by weak manufacturing numbers earlier in the week and a number of poor corporate updates.

That has also knocked sentiment in London, where the mood has not been helped by the performance of banking giants.

Following yesterday's forecast by Barclays final profits were likely to be at the lower end of targets, it was the turn of Lloyds TSB to warn today that it would raise the amount it sets aside to cover bad debts.

Lloyds fell 17.5p to 513p while Barclays eased 9p to 424p, HBOS slipped 12.5p to 660p and Royal Bank of Scotland tumbled 35p to 1516p.

Elsewhere, Vodafone eased after initially gaining as traders expressed relief that its bid for control of French telecoms group Cegetel had been scuppered by media giant Vivendi. Shares fell 2p to 117.25p.

Outside the Footsie, transport group Stagecoach surged 20%, or 3.75p to 22.5p, after announcing plans to shake-up its business in the wake of a heavy profits fall.