The FTSE 100 share index has fallen in early trading after bank and oil stocks led a broad retreat following news that US interest rates have been left on hold despite concern about the faltering economy.
By 9.02 a.m. the FTSE 100 was down 82.4 points, or two per cent, at 4,189.3, after falling as low as 4,181.2 to erase its 50-point gain yesterday.
The heavyweight banking sector knocked 24 points off the FTSE's value after being hit by a batch of bad news, including a sharp fall by US stocks late on yesterday following news that the US Federal Reserve had left interest rates unchanged at 40-year lows and warned of weak economic conditions.
Also weighing were poor results from European giant Credit Suisse and several banks starting to trade ex-dividend, including Lloyds TSB, Barclays and HBOS, which all fell two per cent.
Bradford & Bingley shares dipped 3.5 per cent after the mortgage bank reported a five per cent rise in half-year profits, which was at the lower end of expectations.
The reaction to yesterday's Fed's decision to maintain interest rates - which had been widely expected - also spilled over to other sectors.