FTSE 100 down despite bank cash

After briefly surging above the 5,000 mark in early afternoon trading, the FTSE 100 once more headed down to close at 4,882.70.

The index was again at its lowest ebb since 2005 despite earlier gains from a co-ordinated effort from central banks to prop up the financial markets with short-term loans.

HBOS, which started the day with news of a deal that will see it taken over by high street rival Lloyds TSB, ended 17.34 per cent higher than last night at 172.60p.

This was down from an earlier high of 229.25p after investors initially gave the deal a cautious backing.

Lloyds TSB closed 15 per cent down to 237.50p following a peak of 308.75p at 13:00 BST.

Other fallers on the index included financial stocks including Barclays and insurer Old Mutual, while DIY retailer Kingfisher rose on better-than expected profits.

Tim Hughes, head of sales trading for IG Index, said: "News of a huge cash injection from central banks, including the Bank of England, is a positive step for the credit markets, but investors will be wise to the fact that the banks are unable to simply wave a magic wand and set things right.

"The FTSE is battling once again with the 5000 mark and jittery investors are looking elsewhere, especially towards the safe haven of gold, so the banks' injection is simply numbing the markets for now.

"It is likely that any upward momentum will have to overcome more potential shocks from the financial sector to prove sustainable."