Economics / Markets

The Bank of England has cut interest rates a day early to 4.5pc as part of a co-ordinated move with other central banks.

Base rates should be cut by 1pc tomorrow, which would enhance the MPC's reputation and demonstrate that it grasps the urgency of improving the dire state of markets, according to Douglas McWilliams, chief executive of cebr.

The FTSE was fast approaching a staggering 9% drop on a Monday developing into the blackest yet.

Shares in HBOS, Lloyds TSB and Barclays climbed more than 14%, 9% and 8% respectively on Friday after the FSA raised the savings guarantee in the event of a bank going bust.

Investors took a cautious approach when London markets opened, with the FTSE 100 down 28.4 points (0.58%) to 4,841.

The Dow Jones Industrial Average has taken an unexpected fall in early trading, slumping almost 2% to 10.622.15, despite a confirmed $750bn bail-out of the nation's bad debt.

A near 20% jump in the share price of Halifax Bank of Scotland (HBOS) helped steer the FTSE clear of the 5,000 mark on Thursday.

Shares in HBOS and Lloyds TSB staged a late rally fuelling speculation the buyout deal is back on track.

Shares in the FTSE 100 saw a tumultuous but mostly positive morning after news of an alternative to the $700bn bail-out emerged in the US.

London and European markets calmed down in mid-morning trading after the sharp opening decline driven by the rejection of the US $700bn bank bail-out plan.