UK Markets tumble as banking fears spread across Europe
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Britain's blue chip companies lost £60 billion in value in just a few minutes today as investor confidence crumbled and political leaders battled to avert the threat of recession.The FTSE 100 index of leading shares fell by some 250 points in the first six minutes of trade, following sharp losses across Asia, and drifted down to reach a four-year low of 4,670.9 by late morning, 6 per cent down on Friday's close.
For policymakers and central bankers, it was a nightmare start to the week – little helped by the failure of EU leaders to agree on a European banking rescue scheme or even, it appeared, on a common strategy.
There was continued confusion as to the detail of Germany's decision to guarantee all private bank deposits as Austria and Denmark broke ranks to follow suit and Spain threatening to do so if the EU did not take action.
Both Gordon Brown and Alistair Darling, the Chancellor, who is keen to avoid a similar blanket guarantee, were working the phones. Mr Brown discussed the crisis with President Sarkozy of France this morning and was due to talk with Angela Merkel, the German Chancellor, later today to clarify Germany's plans.
"In the last 24 hours, the Prime Minister and the Chancellor have been spending a lot of time on the phone. We continue to urge cooperation at an EU and international level," his spokesman said.
No stock was in positive territory on the UK benchmark index but banks were again among the biggest fallers, with Barclays, Royal Bank of Scotland and HBOS down between 11.8 and 15.5 per cent. HBOS was marked down partly on fears that the Treasury could move towards a taxpayer-funded recapitalisation of British banks – effectively a partial nationalisation – which could reopen its takeover by Lloyds TSB.
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