Global credit crisis sees FTSE fall

Financial stocks were under more pressure today as uncertainty over the extent of the credit crisis continued to cloud world markets.

Barclays and Royal Bank of Scotland dived by 2% or more, while two of the casualties of the crisis in the UK – Northern Rock and buy-to-let specialist Paragon – recorded fresh double-digit percentage falls.

The overnight high of 99.29 dollars for oil prices lifted the likes of BP and Royal Dutch Shell, but the FTSE 100 Index was 103.5 points lower at 6123 by mid-morning as traders sold into yesterday’s gains of nearly 2% from top-flight stocks.

In a sea of red there were only four stocks in positive territory, with exploration and production firm BG Group up 29p to 1001p, a rise of 3%. Shell, up 38p to 2006p, and BP – 2p ahead at 582p – were close behind.

But the fallers were again led by Northern Rock – down more than 12% or 11.5p at 85.5p – as the troubled mortgage lender confirmed receipt of a rescue proposal “materially below” its market value last night.

Fellow lender Alliance & Leicester also dropped 29p to 565p in a poor session for banking stocks which saw Barclays off 18.75p at 497.75p, Halifax Bank of Scotland down 21p at 720p and HSBC off 22p at 812.5p. Royal Bank of Scotland dipped 6.25p to 406p, a fall of 2%.

Media group Daily Mail & General Trust was another prominent faller despite in-line results and “encouraging” current trading. The stock was off 42p – or 7% – at 535p, as analysts expressed concerns about trading prospects, particularly in light of the volatile advertising market.

Outside the top flight, buy-to-let specialist Paragon dived another 21% after revealing funding difficulties yesterday. The stock, which closed 39% lower last night, was off another 26p to 99p.