The fallout from Lehman Brothers’ collapse has reverberated around global stock markets, leading to falls of five to six per cent in Japan and Hong Kong.

After Lehman Brothers filed for bankruptcy, another Wall Street veteran Merrill Lynch was rescued by Bank of America and the world’s biggest insurer American Insurance Group (AIG) admitted it was seeking emergency funding.

Unsurprisingly, banking and insurance stocks around the world were hit by the news from the US.

In Tokyo, the Nikkei’s share average dropped 4.95 per cent to its lowest in three years.

Meanwhile, the Dow Jones industrial average slid more than 500 points, or 4.4 per cent, in its worst performance since the September 2001 attacks.

Oil also fell as investors pulled out of commodities, dropping under $100 a barrel for the first time in six months. Light, sweet crude declined to $95.71 a barrel on the New York Mercantile Exchange yesterday.

The FTSE 100 fell further on opening to 5,149.20 from last night’s close of 5,204.20.

Financial stocks were still falling after yesterday’s news, although travel companies were benefiting from the sudden drop in oil prices.

British Airways’ stocks were up 3.35 per cent by 08:45 BST and shares in TUI Travel were up 2.41 per cent.

HBOS was still the worst hit in the blue-chip index, down 8.82 per cent in early trading, with Barclays close behind, down 6.17 per cent.

See also – Barclays may buy Lehman assets