FTSE down 1%

London’s blue chip index fell more than 1% today after optimism over moves to pump billions into frozen money markets faded.

The FTSE 100 Index was as much as 114 points lower after the action by five leading central banks failed to lift investor gloom, despite an initial surge on the news yesterday.

Banking stocks were once again on the back foot as the benchmark index slipped 98.4 points lower to 6461.2 by mid-morning.

Halifax Bank of Scotland led the financials lower after a trading update fuelled concerns about pressure on margins and funding costs following the crunch.

While HBOS reassured underlying earnings would be in line with market hopes, its shares slipped 56p to 777p, a drop of nearly 7%.

Other players in the sector following suit were Royal Bank of Scotland, off 22.5p to 440p, Barclays down 24.5p to 531.5p and Lloyds TSB, which fell 19p to 479.75p.

Rentokil Initial provided the biggest blue-chip fall of the session, tumbling 23% or 34.3p to 112.4p, after warning that weaker consumer spending would leave profits at its City Link operation around £10m (€13.9m) lower than expected.

The world’s biggest drinks can maker Rexam also slipped nearly 10% after warning of the impact of soaring oil costs and weaker US dollar on the firm’s results. Shares were off 49.5p at 438p.

Other stocks on the back foot included Penguin-to-Financial Times publisher, down 41.5p at 704p after a Credit Suisse downgrade raising doubts over the firm’s US outlook.

Oil and gas exploration group BG led a shortened risers board amid speculation about another significant find in Brazil. Shares were 63p higher at 1146p, a gain of almost 6%.

Drugs giant GlaxoSmithKline also advanced on a push from Societe Generale, which emphasised the defensive qualities of the firm’s wide-ranging product portfolio. This moved the shares 12p higher at 1326p.