FTSE falls knocked by banks
The blue-chip share index shed over 2 percent by midday on Wednesday with banks knocked as sterling touched 12 year lows and consumer stocks hit by disappointing news in the pubs and retail sectors.
FTSE gains as metals spur minersAt 12:50 p.m., the FTSE 100 was down 121.3 points, or 2.1 percent, at 5,499.4.
Banks accounted for over 25 negative index points, affected by worries about the health of the global economy, the housing market and further writedowns.
HBOS, Lloyds TSB and Standard Chartered lost 2.1-3.5 percent, while Barclays shed 4.1 percent after broker RBS cut its rating on the stock to "sell" from "hold".
"Banks are doing the most damage to the FTSE 100, seemingly due to the lukewarm response to Gordon Brown's plans to boost the housing market, said Nathan Miller, a trader at CMC Markets.
"The increase in the stamp duty threshold and allocation of 1 billion pounds of interest free loans to first time buyers are not expected to be able to counter the freefalling house prices and reduced demand for new homes," Miller added.
HSBC shed 1.75 percent. South Korea's Choson Ilbo newspaper said both HSBC and an unidentified Chinese bank were among potential buyers of Lehman Brothers, citing a financial industry source.
Adding to the overall negative sentiment on the economy, sterling's slide continued as it hit a 12 year low against a basket of currencies.
In other financials, Schroders slipped 3.6 percent after Morgan Stanley cut its rating on the stock to "underweight" from "equal weight" and reduced its price target to 970 pence from 975 pence.
Insurer Friends Provident dropped 4 percent after Panmure Gordon cut its rating to "hold" from "buy" as the stock has hit its 102 pence target price and in the absence of any real sense of recovery in investment markets.
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