City braced after bail-out vote

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Experts suggested that the FTSE could drop a further 200 points when London opens, wiping a further £48 billion off the value of blue chip stocks - adding to the £64 billion loss it has already sustained.

In the US, the fall-out from the House of Representatives' refusal to back the rescue plan was immediately followed by a drop of nearly 5% in the Dow Jones Industrial Average.

The move piled on the gloom over the UK economy, with fears of further contagion from the US crisis.

It comes following a day in which the FTSE plunged 269.7 points to 4818.8 - a 5.3% fall and its lowest close since April 2005.

Responding to the vote in the US, Justin Urquhart Stewart, of Seven Investment Management, said: "This is not good news at all. Although 700 billion dollars wouldn't have solved the problem, it would have helped. Things could get nasty."

David Buik, of Cantor Index, said: "They will have to go back and renegotiate. To have no agreement is a non-option, it is just ridiculous.

"Those who have have voted 'no' have engaged their backsides rather than their brains."