FTSE down this morning

London’s top flight share index fell 2.5% today as investors ditched banking stocks following the crisis at US investment bank Bear Stearns.

The fall for the FTSE 100 Index followed plunges in Asian markets overnight as investors digested the Wall Street bank’s emergency bailout and acquisition by rival JP Morgan Chase.

By mid-morning the Footsie was 142.1 points off at 5489.6 as a wave of selling took place during the continuing fallout from the credit crunch.

The Bank of England also announced a £5bn (€6.5bn) cash injection to ease frozen overnight lending markets.

Banks topped the fallers’ board, with Alliance & Leicester 12% down, or 61.5p, at 451p. Next up was Britain’s biggest mortgage lender Halifax Bank of Scotland, which lost nearly 11%, or 44.25p to 483.75p.

Shares in rivals Royal Bank of Scotland and Barclays also fell sharply, down 27.25p to 306.5p and 31.5p to 401.5p respectively. Lloyds TSB joined the slide, losing 20.75p to 400.5p.

More gloomy evidence of the US housing market collapse was also shown by heating and plumbing giant Wolseley’s interim results, as pre-tax profits fell by nearly three quarters. Shares were off 35.25p, to 496.75p, more than 6%.

The gloom spread to one of Britain’s biggest housebuilders Taylor Wimpey, which eased 9p to 153p, and DIY firm B&Q owner Kingfisher also lost ground, falling 6p to 124.3p.

Nuclear power station owner British Energy was one of a handful of firms in positive territory as it confirmed talks over a possible merger today, lifting shares more than 10%, or 58p, to 629.5p.

Leisure group Whitbread also added 7p to 1196p after talk of a merger between its Premier Inn arm and Travelodge, which posted record profits today.

Oil major Royal Dutch Shell slid back 6p to 1709p after early gains following reassuring comments about its reserves in a strategy update.