The London market was given a late session boost from the US today, but the lift was not enough to save Royal Bank of Scotland from plunging into the red.
Part-nationalised RBS closed 12% down after reporting £7.5bn (€8.82bn) of bad debts and warning of a lengthy recovery - scrapping any paper profits the taxpayer notched up on its 70% stake in yesterday's session.
However, better-than-expected unemployment figures in the US helped send stocks higher on both sides of the Atlantic, with London's FTSE 100 Index closing through the 4700 barrier - up 41 points at 4731.6.
The Dow Jones Industrial Average on Wall Street rose 1.5% in early trade after data showed the rate of unemployment dropped from 9.5% in June to 9.4% - the first recorded fall in 15 months.
US Government-owned American International Group (AIG) added to the investor optimism, posting its first quarterly profit since before the recession began in late 2007.
The bailed-out firm said it made $1.82bn (€2.14bn) in the three months to the end of June, compared to a loss of $5.4bn (€6.35bn) recorded in the same period last year.
The news gave hope that the world's biggest economy may finally be pulling out of recession.
But in London, the focus of the session centred on RBS, which was the leading faller with a drop of 6.46p to 46.99p after posting a net loss of £1bn (€1.17bn) for the six months to June 30.
Lloyds Banking Group also retreated from recent highs with a fall of 2.7p to 102p.
Lloyds shares have risen in recent days on speculation the economic recovery may prompt the bank to raise capital independently and negotiate a watered-down version of the Government's toxic asset protection scheme.
But Barclays, which has not accepted State aid, clawed out of the red amid wider market optimism, closing up 11p at 365p.
Miners were not so lucky, with Eurasian Natural Resources 31p lower at 848.5p, while Rio Tinto fell 73.5p to 2421.5p.
Elsewhere, retailers received a boost from another strong set of weekly sales figures from department store business John Lewis.
Marks & Spencer climbed more than 1% to gain 3.7p at 349.5p. Next also rose, by 5p to 1705p, as did Argos and Homebase parent firm Home Retail Group, up 1.2p at 312p.
In the FTSE 250, Sports Direct International was down 2.25p to 88.75p after it emerged the Sports World group will face a full-blown competition investigation into its two-year buying spree of stores from rival JJB Sports.
Greggs, meanwhile, was up nearly 6%, or 21.1p to 402p ahead of interim results next Tuesday, which are expected to show further like-for-like sales improvement and an increase in first half profits.
The biggest Footsie risers were Serco ahead 14.9p to 412p, Barclays up 11p at 365p, Vodafone up 3.5p at 127.95p and Experian up 13p at 512.5p.
The biggest Footsie fallers were Royal Bank of Scotland down 6.46p to 46.99p, Icap off 17.4p at 447.3p, Eurasian Natural Resources down 31p at 848.5p and British Land down 17.3p at 480.6p.