The FTSE 100 has plunged back into negative territory amid renewed concerns over the US economy and a steep fall in banking shares across Europe.
At close the blue-chip index was down over 3 per cent at 5007.53 with fears that France may follow the US in losing its AAA credit rating also sweeping across the market.
At 16.46pm, the Dow Jones was down over 4 per cent to 10783.59, while the S&P500 has fallen 3.53 per cent to 1,131.46. The falls come as U.S. traders appear to have reassessed their reaction to the Federal Reserve’s announcement that it was likely to keep interest rates at near zero for the next two years.
Shares have also tanked across Europe with France’s Cac 40 down 5.26 per cent and the German Dax down 5.23 per cent at closing.
Banks have led the fall in the FTSE 100 – which was up over 100 points in early trades this morning – with three of them in the top losers in the index. Barclays was the biggest faller, having closed down 8.7 per cent, while Standard Chartered and Royal Bank of Scotland Group were down 7.5 and 7.3 per cent respectively.
In France, SocGen has also denied that it is under any financial pressure. The bank was the biggest faller in the Cac 40 having ended the day down 14.7 per cent. Credit Agricole, Axa and BNP Paribas were also among the top five fallers in the index.