Investors' confidence battered

Investors’ confidence was hit from all sides today as the health of Europe’s banking sector moved deeper into critical territory.

The FTSE 100 Index was 2.6% lower, closing below the 5,000-point mark for the first time since July 2010, after a shock profit warning from Germany’s Deutsche Bank added to fears of a Greek debt default.

The Deutsche bank update also came as French and Belgian officials fought for the future of Belgian lender Dexia, as it buckles under the weight of its exposure to Greece’s burgeoning debt pile.

EU finance ministers earlier said Greece will have to wait until November for its next €8bn bailout loan after the country said it would miss its deficit-reduction targets.

Elsewhere, official figures showed a decline in US factory orders in August, with the worse-than-expected figures fuelling concerns over the health of the world’s largest economy.