Britain's FTSE 100 share index was down at mid-session, dragged lower by banks amid disappointment that the US Federal Reserve left interest rates on hold as it warned of weak economic conditions in the country.
BP fell two per cent, Shell lost around three per cent, and Scottish & Newcastle lost 4.8 per cent, as they were among the clutch of stocks to start trading ex-dividend, taking a combined 16 points off the index's value.
By 11.08 a.m. the FTSE 100 was down 77 points, or 1.8 per cent, at 4,194.7, wiping out all of Tuesday's 50-point rally ahead of the Fed's decision to leave interest rates unchanged, and warn that economic risks have tilted toward weakness in the US economy.
Losses in the heavyweight banking sector accounted for much of the damage, taking 24 points off the FTSE 100's value. Weak results from European giant Credit Suisse also hit sentiment, while losses in some stocks were compounded as several banks went ex-dividend, meaning new buyers of the stocks will no longer qualify for the latest dividend payouts.
Among such stocks were Barclays, down 2.8 per cent, and Royal Bank of Scotland, down 1.3 per cent. Lloyds TSB was the biggest faller, down 5.3 per cent, as it went ex-dividend and was knocked by negative comments from analysts at Credit Suisse First Boston.
Mortgage bank Bradford & Bingley shed five per cent to 323 pence after the mortgage bank reported a five per cent rise in interim profits, at the lower end of expectations.
Weakness in US stock index futures were indicating Wall Street was on course to extend its post-Fed slide.
Mortgage bank Bradford & Bingley shed five per cent to 323 pence after the mortgage bank reported a five per cent rise in interim profits, at the lower end of expectations. Weakness in US stock index futures were indicating Wall Street was on course to extend its post-Fed slide.