Libor soars to high as banks run scared

The overnight lending rate between banks, known as Libor, jumped a staggering 4.31 percentage points from 2.57% to 6.88%, the biggest increase on record to an all-time high.

Borrowing pounds overnight also surged, with sterling Libor up from 3.71% to 6.78%.

It came despite central banks pumping billions of dollars into the banking system to prevent it seizing up further following last night's rejection of the $700 billion bank bailout plan in the US.