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The Actuary The magazine of the Institute & Faculty of Actuaries

FTSE dives into the red on banking woes

Shortly after 2.30pm, London's leading share index was down 3.4%, or 185 points, to 5146.

Barclays and Lloyds Banking Group have both tumbled more than 8% with Royal Bank of Scotland down 7.9% after fresh fears over the European banking sector sent investors into panic mode.

Banks shares plunged after the European Central Bank lent dollars to an unnamed eurozone bank, reports the BBC.

The ECB intervention - the first of its kind since February - further stoked euro concerns after France and Germany set out plans for a controversial tax on financial transactions.

In Germany, Commerzbank has slipped 5%, with Deutsche Bank falling more than 4%.

Mirroring the FTSE's fall, the Dax is 4.8% in the red whilst France's Cac 40 is down nearly 4%.

Banking woes added to fears the global economy is stalling, with Morgan Stanley earlier warning the world is on the brink of a double-dip recession as it cut its growth forecast for this year.

Across the Atlantic, the Dow is 3.86% in the red shortly after opening with Bank of America, down 8.4%, the day's biggest loser.

Labor Department figures showing the number applying for unemployment benefit climbed by 9,000 last week served to underline the fragile state of the US economy just weeks after the country was dramatically downgraded by S&P.

Meanwhile, news Japanese exports fell 3.3% in July further pointed to a worrying slow-down in the global economy.

This article was first published on The Actuary's sister site Professional Pensions.