Buoyant banks helped the FTSE 100 Index return to winning ways as shares in state-backed Lloyds Banking Group passed a key threshold today.

Britain’s loss of its prized AAA credit rating intensified the pressure on sterling today despite another rally for London’s top flight shares index.

World shares and the euro fell yesterday as traders turned their focus to the festering fiscal problems in the US and Europe after the re-election of President Barack Obama signalled no dramatic shift in US economic policies.

Hopes that European leaders had made genuine progress towards stemming the eurozone debt crisis lifted investors’ spirits after yesterday’s banking sector bloodbath.

The FTSE 100 Index cheered investors in 2010 with better-than-expected growth of about 9%, although there are fears that the coming year could be much more difficult for the London market.

BP slid 2% today as investor fears over the cost of the Gulf of Mexico oil spill resurfaced in the wake of legal action by the US government.

The freefall in world markets continued today as Wall Street opened with more heavy losses.

More than £93bn (€119.8bn) was wiped from the value of the UK's biggest companies today as London's FTSE 100 suffered its biggest fall since Black Monday.