Economics / Markets

Alistair Darling's promise to avoid ‘knee jerk' reactions to combat weaknesses in the financial system, has done little to bolster investor confidence, as the FTSE plunges 40.06 points (0.75%) to 5271.21.

Relentless trading on the FTSE helped it to a near 9% gain on Friday and a record one-day rise.

The swift advance of banks on the FTSE this morning may represent the clearest sign yet the UK markets view yesterday's events as the beginning of the end of a financial crisis described as the worst since the Great Depression.

Shares in HBOS are soaring in early trading on Thursday on the back of its confirmed £12.2bn takeover by Lloyds TSB.

The MPC could be set to slash interest rates in October, according to New Star's chief economist, Simon Ward.

The FTSE100 plunged under the 5,000 barrier for the first time since June 2005 this afternoon while the US market fell on more bad news from AIG.

CPI inflation rose to 4.7pc in August, the highest level recorded since CPI records began in 1997, with the upturn attributed to higher energy and food prices, compared to a year ago.

The FTSE100 plummeted beneath its 52-week low this morning following further significant losses for Halifax Bank of Scotland (HBOS).

The UK is currently in a shallow recession, with growth in 2009 expected to be the weakest since 1992, according to the CBI.

Resources have helped the FTSE surge ahead to 5416.70, having climbed 98.30 points (1.85%.)