FTSE plunges to four-year low

As fear swept through global markets and governments rushed to prop up banks across Europe the Footsie slumped 7.8% - its largest one-day percentage decline since the aftermath of Black Monday in October 1987.

The index closed 391.1 points lower at 4589.2 - its lowest close total since October 2004 - as investors were rocked by the latest turmoil in the European banking sector.

But Chancellor Alistair Darling - reportedly considering moves to shore up UK banks with taxpayers' cash - did little to restore shattered confidence with firm commitments.

He said "all practical options must remain open" for dealing with the crisis, but added that it would be "irresponsible" to give a running commentary on plans.

The pressure came after German lender Hypo Real Estate became the latest to receive state aid. Italy's largest bank, Unicredit, also warned on profits after announcing asset sales and plans to shore up its balance sheet with a 6.6 billion euro (£5.1bn) boost.

Meanwhile, French bank BNP Paribas agreed to buy a majority stake in struggling bank Fortis - which is already part-nationalised. Elsewhere, Iceland's stock exchange suspended trading in shares of six major banks as its Government works on an economic rescue plan. Iceland's Glitnir bank was nationalised last week.

The shockwaves reverberated through global stock markets. In the US, Wall Street's Dow Jones Industrial Average traded below the 10,000 mark for the first time in more than three years.

In Asian markets, Japan's Nikkei 225 average slid more than 4% to a four-year low, while in Hong Kong the Hang Seng tumbled 5% as Friday's backing of a US financial rescue was all but forgotten.

In London, investors were unnerved by reports that the Government could take big stakes in banks - effectively part-nationalisation - to strengthen their finances. Halifax Bank of Scotland and Royal Bank of Scotland both slumped 20%, while Barclays lost 15% .